UNITED STATES DISTRICT COURT 

FOR THE 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/Ross Holdings LLP v. Federal Home Loan 

Mortgage Corp., No. 07-cv-796 ("Graff/Ross f'), in which this Court recently issued a 

ruling of invalidity as to the challenged patent 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"): Patent No. 7,685,053 (the "'053 patent") and Patent No. 

7,908,202 (the "'202 patent"). On November 15, 2010, plaintiff Federal Home Loan 

Mortgage Corporation ("Freddie Mac") filed a complaint against Graff/Ross seeking a 

1 Unless 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. 
declaratory judgment of non-infringement or invalidity of the '053 patent.2 Compl. [Dkt. 

# 1]. Thereafter, defendant counterclaimed for patent infringement. See De f.'s Answer to 

Pl.'s Am. Compl. for Declaratory J. ("Def.'s Ans.") [Dkt. #9] at 7. On May 19,2011, 

Freddie Mac filed a complaint in a separate action seeking a declaratory judgment of noninfringement or invalidity of the '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.'s Answer & Countercls., No. 11-cv-941 [Dkt. #7] ("Def.'s '202 Ans."). On 

September 9, 2011, defendant filed a Motion for Partial Summary Judgment as to Patent 

Validity ("Def.'s Mot. Validity") [Dkt. #24] with respect to both patents. Plaintiff 

opposed this motion, and on May 21, 2012, filed a Motion for Summary Judgment of 

Invalidity Under 35 U.S.C. § 101 ("Pl.'s Mot. Invalidity") [Dkt. #33] as to both patents. 

Upon consideration of the parties' pleadings, relevant law, and the entire record herein, 

plaintiff Freddie Mac's motion [Dkt. #33] is GRANTED and defendant Graff/Ross's 

motion [Dkt. #24] is DENIED. 

2 Plaintiff filed an amended complaint on February 17, 2011, supplementing its 

allegations. See First Am. Compl. ("Am. Compl.") [Dkt. #7]. 

3 Graff/Ross originally sought to amend its complaint in Graff/Ross I to include 

allegations related to the '053 and '202 patents. See Graff/Ross's Notice Concerning 

Amending Compl. to Add Two Related Graff/Ross Patents, Graff/Ross I, 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/Ross I, No. 07-cv-796 [Dkt. #98]. This 

request was denied by the Court. See Minute Orders, Graff/Ross I, No. 07-cv-796 (May 

12 & 16, 2011). Because these later filed cases, 10-cv-1948 and 11-cv-941, "involve the 

same accused products," the parties proposed a joint schedule and filed joint briefing in 

the cases. See Revised Joint Meet & Confer Statement Under LCvR 16.3 & Rule 26(t) 

[Dkt. #29] at 1-2. Therefore, this Court will simultaneously address the identical motions 

filed in each case. 

2 
BACKGROUND 

On March 23, 2010, the USPTO issued the '053 patent, entitled "Bidder System 

Using Multiple Computers Communicating Data to Carry Out Selling Fixed 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 of a component of a fixedincome asset," and both "are continuations of the '347 Patent" at issue in related case 

Graff!Ross Holdings LLP v. Federal Home Loan Mortgage Corp., No. 07-cv-796. Mem. 

ofP. & A. in Supp. ofDef.'s Mot. Validity ("Def.'s Mem. Validity") [Dkt. #24-1] at 3. 

Plaintiff alleges that Freddie Mac has infringed on these patents "by using computer 

systems and methods to conduct electronic bond auctions of fixed income instruments."5 

Def.'s Ans. at 7; Def.'s '202 Ans. at 7-8, No. 11-cv-941. Now both parties seek a 

determination of the validity of the patents. See generally Def.'s Mot. Validity; Pl.'s 

Mot. Invalidity. At issue is the validity of614 claims of the two different patents. Pl.'s 

Mem. ofP. & A. in Supp. ofPl.'s Mot. Invalidity ("Pl.'s Mem. Invalidity") [Dkt. #33] 

at 4; Def.'s Mem. ofP. & A. in Opp'n to Pl.'s Mot. Invalidity ("Def.'s Mem. Opp'n") 

4 Richard A. Graff is listed as the sole inventor of the patents, but he assigned his 

interest to Graff/Ross. See Am. Compl. ~ 17 (the '053 patent); '202 Compl. ~ 29, No. 11-

cv-941 (the '202 patent). 

5 I find it important to note, as plaintiff so kindly pointed out, that Freddie Mac 

does not host the website it uses to conduct these auctions; rather, an entity named Grant 

Street Group "runs the website," and Freddie Mac is merely a user. Pl.'s Mem. Invalidity 

at 1 n.l. According to plaintiff, Graff/Ross curiously has not sued Grant Street. /d. 

3 
[Dkt. #37-1] at·3.6 For the sake of ease and clarity, I will analyze the claims in 

accordance with the categories identified by plaintiff in its motion for summary 

judgment. 

Plaintiff divided the claims into nine groups. Group 1 consists of independent 

claims describing a "computer system" similar to the independent claim found invalid by 

this Court in Graff/Ross I. Pl.'s Mem. Invalidity at 4, 10. Group 2 consists of claims 

dependent on Group 1 Claims, 7 but limited to particular fields of use. !d. at 4. Group 3 · 

Claims include two independent claims, and claims dependent on them, that describe the 

"methods" of Groups 1 and 2 Claims. !d. Group 4 Claims include two independent 

claims directed at multiple computer systems that implement Group 1 Claims. !d. 

Group 5 consists of claims dependent on Group 4 Claims, but limited to particular fields 

of use. Id. Group 6 contains one independent claim that describes the method used by 

the Group 4 Claims. !d. Group 7 consists of claims dependent on the Group 6 Claim, but 

limited to particular fields of use. Id. Group 8 Claims include three independent claims, 

6 The '053 patent contains 415 claims, U.S. Patent No. 7,685,053, Ex. A to Pl.'s 

Mem. Invalidity, and the '202 patent contains 199 claims, U.S. Patent No. 7,908,202, 

Ex. B to Pl.'s Mem. Invalidity. Sixteen ofthe 614 claims-four claims ofthe '053 patent 

and twelve claims of the '202 patent-are independent claims, and the remaining 598 

claims--411 claims of the '053 patent and 187 claims of the '202 patent-are dependent 

on one or more ofthe independent claims. Pl.'s Mem. Invalidity at 8; Def.'s Mem. 

Opp'n at 3. Of the 614 claims, 470 claims, including thirteen of the sixteen independent 

claims, assert use of a "computer system," while the remaining 144 claims, including 

three independent claims, recite a method. Def.'s Mem. Opp'n at 3. 

7 Dependent claims "contain a reference to a claim previously set forth and then 

specify a further limitation of the subject matter claimed. A claim in dependent form 

shall be construed to incorporate by reference all the limitations of the claim to which it 

refers." 35 U.S.C. § 112. 

4 
and claims dependent on them, that describe the apparatus used to implement Groups 6 

and 7 Claims. 8 !d. And, Group 9 consists of claims 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. 

Plaintiff contends that the "patents-in-suit" fail "to claim patent-eligible subject 

matter." !d. at 1. According to plaintiff, the patents "recite the abstract idea of 

computing a price for the sale of a fixed-income asset and generating a financial output," 

and, because abstract ideas are not patentable, defendant's patents are invalid under 35 

U.S.C § 101. !d. at 3-4. Defendant counters that the patents constitute subject matter 

eligible for patent, and in any event, plaintiff has failed to meet its burden of persuasion. 

Def.'s Mem. Opp'n at 1; Def.'s Mem. Validity at 1-2. Defendant argues that the 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.'s Mem. Opp'n at 1. For the reasons that follow, I find that plaintiff 

has met its burden by clear and convincing evidence, and therefore, GRANT plaintiffs 

motion for summary judgment, and DENY defendant's motion for summary judgment. 

8 The Court's description of Groups 6 and 8 differs slightly from plaintiffs 

descriptions. Plaintiffs Group 6 "claims recite the same abstract idea as Group 1 claims, 

but use generic terms such a 'computer system' and 'processor,"' and "Group 8 claims 

recite in 'method' form the abstract idea of Groups 6 and 7." Pl.'s Mem. Invalidity at 4. 

Upon review of the patent language, however, the Court believes its descriptions are 

more accurate. 

9 Defendant also argues that the validity of the 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 ex parte 

patent application proceeding." Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1359 (Fed. 

Cir. 2007). 

5 
STANDARD OF REVIEW 

Summary judgment is appropriate when, based on the record, there is no genuine 

issue as to any material fact, and the moving party is entitled to judgment as a matter of 

law. See Fed. R. Civ. P. 56( a). The moving party bears the burden, and the court will 

draw "all justifiable inferences" in favor of the non-moving party. Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 255 (1986). But, a party opposing summary judgment "may 

not rest upon the mere allegations ... of his pleading"; instead, he "must set forth 

specific facts showing that there 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 

jury could return a verdict for the nonmoving party." !d. 

ANALYSIS 

A patent is presumed valid 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 of matter," 35 U.S.C. § 101, 

unless the idea to be patented is a law of nature, a physical phenomenon, or an abstract 

6 
idea, Diamondv. Diehr, 450 U.S. 175, 185 (1981). 10 However, "an application of a law 

of nature or mathematical formula to a known structure or process may well be deserving 

of patent protection," Fort Props., Inc. v. Am. Master Lease LLC, 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 of the 

formula to a particular technological environment' or adding 'insignificant postsolution 

activity,"' Bilski v. Kappas, 130 S. Ct. 3218, 3230 (2010) (quoting Diehr, 450 U.S. at 

191-92). 

"[T]he form of the claims should not trump basic issues of patentability." 

Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can., 687 F.3d 1266, 1277 (Fed. Cir. 

2012) (citations omitted). Therefore, a court should "look not just to the type of claim 

but also to the underlying invention," and may find that "a machine, 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 "not presume[ d) 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." 

Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010). 

Further, "[ u ]nless the single most reasonable 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 idea to 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." CLS Bank Int'l v. 

Alice Corp. Pty. Ltd., 685 F.3d 1341, 1352 (Fed. Cir. 2012). 

7 
determine the patent-eligibility of a process, II a court may use the "machine-ortransformation" test (the "MOT test") as "an investigative tool" for analyzing claims 

under§ 101. Bilski, 130 S. Ct. at 3227, 3231. Under the MOT test, a process is patenteligible if it either ( 1) "is tied to a particular machine or apparatus, or (2) [] transforms a 

particular article into a different state or thing." In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 

2008) (citations omitted), aff'd sub nom. Bilski v. Kappos, 130 S. Ct. 3218. But, for "an 

otherwise unpatentable process" to be made patent-eligible by use of "a machine, the use 

of the machine 'must impose meaningful limits on the claim's scope."' CyberSource 

Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011) (quoting In re 

Bilski, 545 F.3d at 961). "[T]he machine must play a significant part in permitting the 

claimed method to be performed," id. (quoting SiRF Tech., Inc. v. Int'l Trade Comm 'n, 

601 F.3d 1319, 1333 (Fed. Cir. 2010)) (internal quotation marks omitted), and must be 

more than "incidental use ... to perform [a] mental process," id., because "the basic 

character of a process claim drawn to an abstract idea is not changed by claiming only its 

performance by computers," Fort Props., 671 F.3d at 1323 (quoting CyberSource Corp., 

654 F.3d at 1375). 

II "The term 'process' means process, art or method, and includes a new use of a 

known process, machine, manufacture, composition of matter, or material." 35 U.S.C. 

§ 100(b). 

8 
L Group 1 Claims 

Group 1 Claims describe computer systems "that allow for the electronic sale of a 

component of a 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. Patent No. 7,908,202 col.61 11.8-24, Ex. B to Pl.'s Mem. Invalidity at 55. 

Claim 104 is nearly identical to the independent method claim previously found 

12 As categorized by plaintiff, Group 1 Claims include the following claims from 

the '202 patent: 57, 58, 76, 104, 106, and 139. Pl.'s Mem. Invalidity at 9. Claim 76 is 

slightly different from the other Group 1 Claims in that it is directed toward "[a] 

machine ... including a computer system." U.S. Patent No. 7,908,202 col.5911.1-2, Ex. 

B to Pl.'s Mem. Invalidity at 54. 

9 
invalid by this Court in Graff/Ross I. 13 See Mem. Op., Graff/Ross I, No. 07-cv-796. The 

equivalence of these claims is readily apparent and the only real difference between the 

claims is the form in which they were drafted. For example, Claim 104 describes "[a] 

computer system to make financial analysis output," whereas Claim 101 of the '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 controlled by a 

processor ... , the processor controlled to manipulate electrical signals to compute a 

system-determined purchase price ... and to generate financial analysis output." U.S. 

Patent No. 7,908,202 col.61ll.8-24, Ex. B to Pl.'s Mem. Invalidity at 55. Similarly, the 

steps of the Graff/Ross I method claim include "converting input data, representing at 

least one component from property, ... providing a digital electrical computer system 

13 Claim 10 1 of the '34 7 patent disputed in Graff/Ross I provided: 

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 connected to 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 of the component; 

and 

generating the financial analysis output at said output means. 

Mem. Op. at 3, Graff/Ross I, No. 07-cv-796. 

10 
controlled by a processor ... ; controlling a digital electrical computer processor to 

manipulate electrical signals to compute a system-determined purchase price ... and 

generating the financial analysis output." Mem. Op. at 3, Graff/Ross I, No. 07-cv-796. 

This Court will not fall victim to "the draftsman's art," Mayo Collaborative Servs. v. 

Prometheus Labs., Inc., 132 S. Ct. 1289, 1294 (2012), and "exalt form over substance," 

particularly here, where "the claim is really to the method or series of functions 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 method underlying the Group 1 computer systems is clearly the same as the 

method described by the Graff/Ross I independent method claim-i.e., computing a price 

for the electronic sale of a component of a fixed-income asset and generating financial 

analysis output. Thus, having already determined that the Graff/Ross I independent 

method claim was a patent-ineligible abstract idea, Mem. Op. at 11-13, Graff/Ross I, No. 

07-cv-796, I easily conclude that the Group 1 Claims are also patent-ineligible. 

Like the claim to "computer readable medium" in CyberSource Corp., and 

contrary to defendant's assertions, the Group 1 Claims recite abstract ideas that fail to 

meet the MOT test. Emphasizing the applicability of the Federal Circuit's decision in In 

re Alappat, 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 'abstract idea' 

exception to patent eligibility." Def.'s Mem. Opp'n at 14-16 (citations omitted). 

However, the Federal Circuit has also noted that, "[a]t its most basic, ... a computer is an 

automatic electronic device for performing mathematical or logical operations," and 

11 
"prior to the information age, a computer was not a machine at all; rather, it was a job 

title: a person employed to make calculations." Bancorp Servs., 687 F.3d at 1277-78 

(citations and internal quotation marks omitted). Therefore, "the use of a computer in an 

otherwise patent-ineligible process for no more than its most basic function ... fails to 

circumvent the prohibition against patenting abstract ideas and mental processes." !d. at 

1278. Here, by looking to the substance of the 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" -even multiple computer component limitations-"to a 

claim covering an abstract concept, without more, is insufficient to render the claim 

patent eligible," Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012). Much 

like Claim 101 to the '347 patent in Graff/Ross I, the Group 1 Claims are directed to 

patent-ineligible subject matter. 

IL Group 2 Claims 

Group 2 Claims are dependent on Group 1 Claims, but limit the claim to particular 

fields of use, such as corporate debt. 15 See, e.g., U.S. Patent No. 7,908,202 col.61 11.25-

14 The patent description specifically states that, as a matter of efficiency, "it 

would be best to use automated means to do computing and data processing," U.S. Patent 

No. 7,908,202 col.8 11.46-50, Ex. B to Pl.'s Mem. Invalidity at 28, not that the computer 

components are integral to the performance of the 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 or by hand. See, 

e.g., U.S. Patent No. 7,908,202 col.1911.9-30, Ex. B to Pl.'s Mem. Invalidity at 34. 

15 As categorized by plaintiff, Group 2 Claims include the following claims from 

the '202 patent: 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 of claim 104, wherein 

the digital electrical computer processor manipulates the electrical signals to generate the 

system-determined purchase price for corporate debt as the fixed income asset."). 

Having determined that the Group 1 Claims' 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 of what 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 idea to one field ... d[ oes] not 

make the concept patentable." Bancorp Servs., 687 F.3d at 1275-76, 1280 (quoting 

Bilski, 130 S. Ct. at 3231). Thus, the Group 2 Claims are not patent-eligible, because 

their various field of use limitations-i.e., corporate debt security (Claim 61); tax-exempt 

security (Claim 63); yield/discount rate (Claim 109)-fail to 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 similar to 

the claims in Groups 1 and 2, but describe the method of the process. 16 Claim 98 is a 

16 As categorized by plaintiff, Group 3 Claims include the following claims from 

the '202 patent: 98-103, 118-127, 131-138, 164-190. Pl.'s Mem. Invalidity at 9. Claims 

98 and 164 are the independent claims. Def.'s Mem. Opp'n at 8-9. 

13 
representative 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 of property 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 of the 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 

other valuation, and; 

producing financial analysis output including one of the one 

valuation and the one price and one of the other valuation and the 

other price at an output device. 

U.S. Patent No. 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 cite to computer components 

for "implementation of a purely mental process that could otherwise be performed 

without the use of a computer," CyberSource Corp., 654 F.3d at 1375, and the dependent 

claims' field of use limitations do not provide sufficient additional limitations, Bancorp 

Servs., 687 F.3d at 1275-76, 1280. Once the "insignificant postsolution activity" is 

14 
removed, the Group 3 Claims are quite similar to 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 that the Group 3 Claims, too, are invalid. 

IV. Groups 4 Claims 

The two Group 4 Claims are independent Claims 3 and 64 of the '202 patent. 

Claim 3 provides: 

A multiple computer system to make financial analysis outputs, the 

multiple computer system including: 

a first computer system controlled to generate a first valuation of a 

component of property, wherein the property is at least one fixedincome asset, as part of a first financial analysis output; and 

a second computer system including a processor programmed to 

receive at least some of the first financial analysis output including 

the first valuation as input, programmed to generate using at least 

some of said input a second valuation of the component reflecting 

computation of a yield/discount rate for the property, and controlled 

to produce 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. Patent No. 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 a processor programmed to receive 

input signals representing a fixed-income asset and controlled to 

manipulate the input signals to generate a valuation of a component 

of the fixed-income asset as part of a first financial analysis output; 

and 

a second computer system including a processor programmed to 

receive at least some of the 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 

15 
system-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 simply applying multiple computer limitations to the same 

abstract idea of computing a price for the sale of a fixed-income asset and generating a 

financial analysis output, and the "yield/discount rate" field of use limitation in Claim 3 

does little to provide additional meaningful limitations. I see no transformation of these 

computer components into "a different state or thing" or innovation that adds something 

"specific to the [abstract idea] other than what is well-understood, routine, conventional 

activity, previously engaged in by those in the field." Prometheus, 132 S. Ct. at 1299, 

1302. Claims 3 and 64 of the '202 patent are directed toward ineligible subject matter. 

V. Group 5 Claims 

Group 5 consists of claims similar to Group 4 Claims, but limited to particular 

fields ofuse. 17 All but two of the Group 5 Claims are dependent claims. However, the 

two independent claims, Claims 1 and 9 of the '202 patent, merely incorporate additional 

field of use limitations to the Group 4 Claims. For example, Claim 1 is essentially 

identical to Claim 3, except that Claim 1 specifies that the fixed-income asset is taxexempt. U.S. Patent No. 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 categorized by plaintiff, 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 

1 and 9 are the independent claims. !d. at 8. 

16 
VI. Group 6 Claims 

The one claim in Group 6 is independent Claim 1 of the '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 of a 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 of the multiple buyers, 

each respective one of said at least one fixed income instrument 

being a respective one of the fixed income instruments; 

program-controlling the first processor in automatically computing a 

first yield/discount rate at least in part from at least some of said 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 of the second computer system and a third 

computer system of another one of the multiple buyers. 

U.S. Patent No. 7,685,053 col.5611.1-26, Ex. A to Pl.'s Mem. Invalidity at 52. 

Defendant emphasizes that the method recites neither "a mathematical formula" 

nor a "fundamental economic practice," and stresses the method's use of computer 

components. Def.'s Mem. Opp'n at 20-21. But a review ofthe substance of the claim 

demonstrates that, at its core, the claim is directed toward computer components that are 

used simply to facilitate the computation of various equations. 18 As this Court previously 

stated, the use of the 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 of efficiency, "it would be best to use automated means to do computing and 

data processing," U.S. Patent No. 7,685,053 col.811.54-61, Ex. A to Pl.'s Mem. Invalidity 

at 28, and then recites some of the various equations used to compute the output. See, 

e.g., id. col.1911.27-48, Ex. A to Pl.'s Mem. Invalidity at 34. 

17 
mental process." CyberSource Corp., 654 F.3d at 1375. The Group 6 Claim is directed 

toward patent-ineligible subject matter. 

VII. Group 7 Claims 

The Group 7 Claims are dependent on the Group 6 Claim and recite additional 

limitations to a particular technological environment or field of use. 19 Because the 

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 of the 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 of a 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 of the multiple buyers; 

and 

program-controlling the first processor in automatically computing a 

first yield/discount rate at least in part from at least some of said 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 categorized by plaintiff, 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. 

18 
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 of the second computer system and a third 

computer system of another one of the multiple buyers. 

U.S. Patent No. 7,685,053 col.64 11.45-64, Ex. A to Pl.'s Mem. Invalidity at 56. Claim 54 

is representative of the 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 of use restrictions. For the same reasons I found the 

claims in Groups 2, 6, and 7 invalid, so too, do I find these claims patent-ineligible. 

IX Group 9 Claims 

Finally, Group 9 includes two dependent claims, Claims 321 and 323 of the '053 

patent. Pl.'s Mem. Invalidity at 9. Claim 321 is dependent on Claim 59, a Group 8 

Claim, and specifies that the output means is a monitor. U.S. Patent No. 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 of corporate debt securities. !d. col.98 11.46-48, 

Ex. A to Pl.'s Mem. Invalidity at 73. The Court has already stated, ad nauseum, that 

merely providing a particular technological environment or field of use limitation to an 

otherwise patent-ineligible subject matter, does not render the claim patentable. 

Therefore, I conclude that the Group 9 Claims are also invalid. 

19 
CONCLUSION 

For all of the foregoing reasons, I find that the defendant's Patent Nos. 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 of Invalidity 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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