# United States **Court of Appeals**  **for the Federal Circuit**

______________________ CONTENT EXTRACTION AND TRANSMISSION LLC, Plaintiff

- Appellant,

v. WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant

- Appellee,

AND
THE PNC FINANCIAL SE RVICES GROUP, INC. AND PNC BANK, N.A., Defendants

- Appellees.

- - - - - - - - - - - - - - - - - - - - - - - - - DIEBOLD, INCORPORATE D, Plaintiff

- Counterdefendant

- Cross Appellant,

v.
CONTENT EXTRACTION A ND TRANSMISSION LLC, Defendant

- Counterplaintiff

- Appellant,

AND MITCHELL MEDINA, CATHERINE ELIAS, AND JEAN

- MARC ZIMMERMAN, Defendants,CONTENT EXTRACTION v. WELLS FARGO BANK 2

AND
JOHN DOE COMPANIES 1

- 100, JOHN DOE COMPANIES 1

- 99, TD BANK GROUP, AND TD BANK, N.A. Third

- Party Defendants.

______________________ 2013

- 1588,

- 1589, 2014

- 1112,

- 1687

______________________ Appeals from the United States District Court for the District of New Jersey in Nos. 12

- CV

- 2501, 12

- CV

- 6960, and 12

- CV

- 7640, Judge Michael A. Shipp.

______________________ Decided: December 23, 2014

______________________ A NATOLY S. W EISER , Zimmerman & Weiser LLP, of Westfield, New Jersey, argued for plaintiff

- appellant Content Extraction and Transmission LLC. With him on the brief was J EAN -M ARC Z IMMERMAN

. F REDERICK L. W HITMER , Kilpatrick, Townsend & Stockton LLP, of New York, New York, argued for defendant

- appellee Wells Fargo Bank, National Association. Of counsel on the brief for defendant

- appellees The PNC Financial Services Group, Inc., et al. was N OAM J. K RITZER , Bakos & Kritzer of Florham Park, New Jersey.

R OY H. W EPNER , Lerner, David, Littenberg, Krumholz & Mentlik, LLP, of Westfield, New Jersey, argued for plaintiff

- counterdefendant

- cross appellant Diebold, Inco rporated . With him on the brief were A RNOLD I. R ADY and B RIAN D. H ILL

.

______________________CONTENT EXTRACTION v. WELLS FARGO BANK 3

Before D YK , T ARANTO , and C HEN , Circuit Judges.
C HEN , Circuit Judge.
Content Extraction and Transmission LLC and its principals ( collectively, CET) ap peal from the grant of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure (FRCP) , in which the United States District Court for the District of New Jersey held that the claims of CET’s asserted patents are invalid as patent

- ineligible under 35 U.S.C. § 101. Cross

- appellant Diebo ld, I nc. (Diebold) appeals from the district court’s dismissal of its tortious interference and Racketeer Infl uenced and Corrupt Organizations Act (RICO) claims against CET in a related action . W e affirm the district court’s dismissal of both CET ’s and Diebold’s claims

. B ACKGROUND
CET owns U.S. Patent Nos. 5,258,855 (’855 patent) , 5,369,508 (’508 patent), 5,625,465 (’465 patent) , and 5,768,416 (’416 patent) (collectively, the asserted patents)

. The ’508, ’ 465, and ’ 416 patents are continuations of the

’ 855 patent , and share substantially the same speci fic ation. The four patent s contain a total of 242 claims. The claims generally recite a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data , and 3) storing th at information in a memory. This method can be performed by software
on an automated teller machine (ATM) that recognize s information written on a scanned check , such as the check’ s amount , and populate s certain data fields with that information in a computer’s memory.
C laim 1 of the ’ 855 patent recites :CONTENT EXTRACTION v. WELLS FARGO BANK 4

A method of processing information from a dive rsity of types of hard copy documents, said method comprising the steps of: (a) rece iving output representing a dive rsity of types of hard copy documents from
an au tomated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, sai d receiving step not prece ded by scanning, via said automated digi tiz ing unit, of a separate document containing format requirements; (b) recognizing portions of said hard copy documents corresponding to a first data field; and (c) storing information from said portions of said hard copy documents correspon ding to said first data field into memory l ocations for said first data field.

’ 855 patent , 16 : 19

– 34. In April and November 2012 respectively , CET filed infringement action s against appellees Wells Fargo Bank, N.A. (Wells Fargo) and The PNC Financial Services Group, Inc. and PNC Bank, N.A. ( collectively, PNC) , alleging that they were using ATMs with check deposit software that infringed its patents

. I n December 2012, Diebold, the manu facturer of Wells Fargo ’s and PNC ’s ATMs, filed an action against CET seeking 1) a declarat ory judgment that its ATMs did not infringe CET’s asser ted patents and that CET’s patents were invalid , and 2) injunctive and monetary relief for tortious interferen ce and violations of the RICO Act arising from CET’s act ofCONTENT EXTRACTION v. WELLS FARGO BANK 5

filing allegedly baseless infringement suit s against Wells Fargo , PNC , and other Diebold customers

. CET counte rclaimed against Diebold by asserting direct and indirect infringement of its patents. The district court eventually consolidated the three inter

- related actions between CET and Wells Fargo, PNC, and Diebold for pretrial purposes. Relevant here, PNC subsequently moved to dismiss CET’s complaint in its entirety pursuant to FRCP 12(b )(6) , on the ground that each claim of the asserted patents was invalid as patent

- ineligible under 35 U.S.C. § 101. PNC focused its arguments on two claims: claim 1 of the ’855 patent and claim 1 of the ’416 patent. PNC contended that these two claims we re representative, and that none of the other claims included anything more than minor changes in format or phrasing. In its oppos ition to PNC’s motion, CET did not challenge PNC’s cha racterization of claim 1 of the ’855 patent or claim 1 of the ’416 pate nt as representative , instead focus ing its arg uments on defending those two claims.

T he district court agree d that all CET’s asserted claims were invalid as patent

- ineligible under § 101 , granted PNC’s motion, and dismis sed CET’s complaint s against both PNC and Wells Fargo

. Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’ n , No. 12

- 6960 , 2013 WL 3964909, at *5 , * 14 (D.N.J. July 31, 2013) ( CET )

. In light of this holding , t he d istrict court also dis missed Diebold’s reques t for a declaratory jud gment of invalidity and noninfringement as moot

. Lastly, t he district court dismissed Diebold’s RICO and tortious interference claims against CET, concluding that CET’s act of filing lawsuits against Diebold’s customers

— such as Wells Fargo and PNC

— was protected under the Noerr

Pennington doctrine , as established in E. R.R. Presidents Conference v. Noerr Motor Freight, Inc. , 365 U.S. 127 (1961), and United Mine Workers of Am. v. Pennington , 381 U.S. 657 (1965 ). CET appealed and Diebold cross

-CONTENT EXTRACTION v. WELLS FARGO BANK 6

appealed the district court’s order dismissing the parties’ complaints. We have jurisdiction under 28 U.S.C. § 1295(a)(1).
S TANDARD OF R EVIEW
We review a district court’s dismissal for failure to state a claim under the law of the re gional circuit. In re Bill of Lading Transmission & Processing Sys. Patent Litig ., 681 F.3d 1323, 1331 (Fed. Cir. 2012). The Third Circuit reviews challenges to a dismissal for failure to state a claim under FRCP 12(b)(6) de novo

. Sands v. McCormick , 502 F.3d 263, 267 (3d Cir. 2007). We review the district court’s determination of patent eligibility under § 101 de novo

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

D ISCUSSION
A n invention is patent

- eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101. T he Supreme Court, however, has long interpreted § 101 and its statutory predecessors to contain an implicit exception : “ laws of nature, natural phenomena, and abstract ideas ” ar e no t patentable. A lice Corp. Pty Ltd. v. CLS Bank Int’ l , 573 U.S. __, 134 S. Ct. 2347, 2354 (2014)

. We focus here on whether the claims of the asserted patents fall within the excluded category of abstract idea s.
T he Supreme Court’s two

- step framework , described in Mayo and Alice , guides our analysis

. Id . at 2355 (citing Mayo Collaborative Servs

. v. Prometheus Labs

. , Inc. , 566 U.S. __, 132 S. Ct. 1289, 1296

– 97 (2012))

. We first determine whether a claim is “directed to” a patent

- ineligible abstract ide a . If so, we then consider the elements of the claim

— both individually and as an ordered combination

— to assess whether the additional elements transform theCONTENT EXTRACTION v. WELLS FARGO BANK 7

nature of the claim into a patent

- eligible application of the abstract idea

. Id

. This is the search for an “in ventive concept”

— something sufficient to ensur e that the claim amounts to “significantly more ” than the abstract idea itself. Id.

T he Supreme Court has not “delimit[ed] the precise contours of the ‘abstract ideas’ category.” Id. at 2357. We know, however, that although there is no categorical business

- method exception , Bilski v. Kappos , 561 U.S. 593, 606, 608 (2010), claims directed to the mere fo rmation and manipulation of economic relations may involve an abstract idea. See Alice , 134 S. Ct. at 2356

– 57

. We have also applied the Supreme Court’s guidance to identify claims directed to the performance of certain financial transactions as involving abstract ideas. See buySAFE, Inc. v. Google, Inc. , 765 F.3d 1350 , 1355 (Fed. Cir. 2014) (creating a transaction performance guaranty for a commercial transaction on computer networks such
as the Internet); Accenture Global Servs., GmbH v. Guidewire Software, Inc. , 728 F.3d 1336, 1338 (Fed. Cir. 2013) (generating rule

- based tasks f or processing an insurance claim); Ban corp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.) , 687 F.3d 1266 , 1278 (Fed. Cir. 2012) (managing a stable value protected life insu rance policy) ; Dealertrack , 674 F.3d at 1333 (processing loan information th rough a clearinghouse). Applying Mayo / Alice step one , we agree with the di strict court that the claim s of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) reco gnizing certain data with in the collected data set , and 3) storing th at recognized data in a memory . The concept of data collection, recognition, and storage is undisputedly well- known. Indeed, humans have always performed these functions

. And banks have , for some time , reviewed checks , recognized re levant data such as the amount,CONTENT EXTRACTION v. WELLS FARGO BANK 8

account number, and identity of account holder, and stored that information in their records. CET attempts to distinguish its claims from those found to be abstract in Alice and other cases by showing that its claims require not only a computer but also an additional machine

— a scanner. 1 Appellant’s Br. 31

– 32. CET argues that its claims are not drawn to an abstract idea because hu man minds are unable to process and recognize the stream of bits output by a scanner. Id. at 29

. However, t he claims in Alice also required a computer that processed streams of bits , but nonetheless were found to be abstract

. See 134 S. Ct. at 235 8

. Similar to how the computer -implemented claims in Alice were directed to “the concept of intermediated settlement,” i d. at 2356 , and the claims in Dealertrack were directed to the concept of “ processing information through a clearing

house ,” 674 F.3d at 1333, CET’s claims are drawn to the basic concept of data recognition and s torage. For the second step of our analysis , we determine whether the limitations present in the claims represent a patent

- eligible application of the abstract idea. Alice , 134 S. Ct. at 2357. For the role of a computer in a computer

implemented inventio n to be deemed meaningful in the context of this analysis, it must involve more than pe rformance of “well- understood, routine, [and] conventional activities previously known to the industry .” Id. at 235 9 (quoting Mayo , 132 S. Ct. at 1294 (internal quotation

1 We note that some of CET’s claims do not explici tly require the use of either a computer or scanner , and refer instead to a generic “application unit” and “aut omated digitizing unit .” See, e.g. , ’855 patent, 18 : 52

– 19:3

. We assume for purposes of PNC’s motion to dismiss, however, that these claims require the presence of both a computer and a scanner
.CONTENT EXTRACTION v. WELLS FARGO BANK 9

marks and brackets omitted))

. Further , “the mere recit ation of a generic computer cannot transform a patent

ineligible abstract idea into a patent

- eligible invention.” Id. at 235 8. Applying Mayo / Alice step two, we agree with the di strict cour t that the asserted patents contain no limit ations— either individually or as an ordered combination

— that transform the claims in to a patent

- eligible applic ation. CET conceded at oral argument that the use of a scanner or other digitizing device to extract data from a document was well

- known at the time of filing, as was the ability of computers to translate the shapes on a physical page into typeface characters. Oral Arg. at 3:35

– 3:55; 16:12

– 16:17, available at http://oralarguments. cafc.uscourts.gov/defa ult.aspx?fl=2013

- 1588.mp3. CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates. See id. T here is no “ inventive concept” in CET’s use of a generic scanner and computer to perform well- understood, routine, and conventional activities commonly used in industry

. See Alice , 13 4 S. Ct. at 2359. At most , CET’s claims attempt to limit the abstract idea of recognizing and storing inf ormation from hard copy documents using a scanner and a computer to a particular technologi cal environment. S uch a limitation has been held insufficient to save a claim in this context

. See Alice , 134 S. Ct. at 2358; Ultramercial, Inc. v. Hulu , LLC , 772 F.3d 709 , 715

– 16 (Fed Cir. 2014) ; buyS AFE , 76 5 F.3d at 1355

. CET next argues that the failure of PNC or the di strict court to individually address every one of its claim s is inconsistent with the statutory presumption of validity that requires proving the invalidity of each claim by clear and convincing evidence

. See Dana Corp. v. Am. Axle & Mfg., Inc. , 279 F.3d 1372, 1376 (Fed. Cir. 2002). The district court , however, correctly determined that addres s-CONTENT EXTRACTION v. WELLS FARGO BANK 10

ing each claim of the asserted patents was unnecessary
. A fter conducting its own analysis, the district court determined that PNC is correct that claim 1 of the ’855 patent and claim 1 of the ’416 patent are representative, because all the claims are “substantially similar and linked to the same abstract ide a.” CET , 2013 WL 3964909 , at *5 (citing Bilski , 561 U.S. at 612 ). Moreover, CET never asserted in its opposition to PNC’s motion that the district court should have differentiated any claim from those identified as representative by PNC

. N or did CET ide ntify any other claim s as purportedly containing an inventive concept

. If CET disagreed with PNC ’s or the district court’s assessment, CET could have identified claim s in its o pposition b rief that it believed would not be fairly represented by claims 1 of the ’855 and ’416 patents for purposes of PNC’s § 101 challenge

. Regardless, w e have reviewed all the claims of CET’s asserted patents , and agree with the district court that , for the purposes of PNC’s § 101 challenge, 1) the claims of the ass erted patents are substantially similar in that they recite little more than the same abstract idea, and 2) claim 1 of the ’855 patent and claim 1 of the ’416 patent are represent ative. CET argues on appeal that certain dependent claims recite additional s teps , such as extracting and detecting specific data fields, repeating some steps, and storing data as image s or text , rendering those claims patent

- eligible

. Appellant’s Br. 40

– 41. For instance, CET notes that dependent claim 44 of the ’ 416 patent additionally r equires: “defining a set of symbols which designate fields of information required by an application program; and detecting the presence of a particular one of said defined set of symbols on a hard copy document and extracting a field of info rmation required by an application program based on said detecting.” Id. This limitation merely describes generic optical character recognition technology, which CET conceded was a routine function of scanningCONTENT EXTRACTION v. WELLS FARGO BANK 11

technology at the time the claims were filed . Oral Arg. at 3:35

– 3:55, 16:12

– 16:17, available at http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2013

- 1588.mp3. Indeed,
a ll of the additional limitations in the claims cited in CET’s appeal brief recite well

- known, routine, and co nventional fu nctions of scanners and computers. Thus,
w hile these claims may have a narrow er scope than the representative claims, no claim contains an “inventive concept” that transforms the corresponding claim in to a patent

- eligible application of the otherwise inel igible abstract idea. Finally, CET contends that the district court erred by declaring its claims patent

- ineligible under § 101 at the pleading stage without first construing the claim s or allowing the parties to conduct fact discovery and submit opinions from experts supporting their claim construction positions

. A lthough the determination of patent eligibi lity requires a full understanding of the basic character of the claimed subject matter, c laim construction is not an inviolable prerequisite to a vali dity determi nation under § 101

. See Ultramercial , 772 F.3d at 714

– 15 ; Bancorp , 687 F.3d at 1273

– 74

. The district court construed the terms identified by CET “in the manner most favorable to [CET],” necessarily assum ing that all of CET’s claims required a machine , even though several claims do not expressly recite any hardware structures

. See supra note 1; CET , 2013 WL 3964909, at * 12. Nonetheless , the district court determined the claims of the asserted p atents were patent

- ineligible. Likewise, w e conclude that even when construed in a manner most favorable to CET, none of CET’s claim s amount to “significantly more” than the abstract idea of extracting and storing data from hard copy documents using generic scanning and processing tech nology. T he district court ’s resolution of PNC’s m otion to dismiss at the pleading stage was therefore proper
.CONTENT EXTRACTION v. WELLS FARGO BANK 12

D IEBOLD ’ S C ROSS -A PPEAL
We turn next to Diebold ’s appeal from the district court’s dismissal of its tortious interference and RICO violation claims against CET

. Diebold’s claims all arise from the following predicate act: the filing of allegedly frivolous infringement suits by CET against Wells Fargo , PNC , and other Diebold customers in an attempt to obtain nuisance settlement s from them

. The district court , however, concluded that the Noerr

- Pennington doctrine immunized CET from both Diebold’s tortious interference and RICO violation claims

. 2
Under Noerr

- Pennington , a person’s act of petitioning the government is presumptively shielded from liability by the First Amendment against certain types of claims

. See BE & K Const. Co. v. N.L.R.B. , 536 U.S. 516, 525 (2002) (quoting Cal

. Motor Transp

. Co. v. Trucking Unlimited , 404 U.S. 508, 511, (1972) ) ; Sosa v. DIRECTV, Inc. , 437 F.3d 923, 930, 931 (9th Cir. 2006) (app lying Noerr

- Pennington to bar a RICO violation claim) ; Pers. Dep’ t, Inc. v. Prof’ l Staff Leasing Corp. , 297 F. App’x 773, 779 (10th Cir. 2008) ( holding that Noerr

- Pennington c an provide immunity from liability arising from a tortious

2 We note that other circuits have held that the act
o f filing a lawsuit, even one which is frivolous, does not by itself constitute an act of “extortion” under the Hobbs Act, 18 U.S.C. § 1951(b)(2), and therefore cannot constitute a predicate act under RICO. See, e.g., Deck v. Engineered Laminates , 349 F.3d 1253, 1258 (10th Cir. 2003); Raney v. Allstate Ins. Co. , 370 F.3d 1086, 1088 (11th Cir. 2004). Treating meritless litigation as a form of extortion pu nishable under RICO would substantially chill even valid court petitioning, as it could subject almost a ny unsu ccessful lawsuit or set of lawsuit s to a colorable claim of a RICO violation

. Deck , 349 F.3d at 1258.CONTENT EXTRACTION v. WELLS FARGO BANK 13

interference claim ). To overcome this presumptive i mmunity, a plaintiff must establish that the defendant’s instigation of litigation was merely a “sham.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc. , 508 U.S. 49, 60 (1993) ( PRE ) . This two

- part test r equires the plaintiff to show not only that the litigation was objectively baseless, but also that the defendant subje ctively intended to harm the plaintiff through the ab use of
a governmental process itself , as opposed to harms flo wing from the outcome of that process

. See i d.

T he district court found that Diebold established the first, but not the second prong of the PRE sham litigation test

. In an oral ruling, t he district court held that Diebold successfully alleged objective baselessness based on the district court’s own analysis of CET’s patent claims as ineligible under § 101 , and “[Diebold’s] allegations that [CET] ’s litigation conduct was solely designed to engender settlement” with Diebold’s customers

. J.A

. 687

– 89. However, the district cour t also determined that Diebold had not shown CET subjectively intended to harm Diebold through its instigation of litigation , as required under prong two of the PRE test

. Id. Although we agree with the district court’s ultimate conclusion regarding CET’s immunity , we find instead that Diebold’s allegation fails the first prong of the PRE test, and thus the district court’s analysis under the second prong wa s unnecessary
. Under the first prong, a “sham” lawsuit must be o bjectively baseless “in the sense that no reasonable litigant could realistically expect success on the merits.” Nobelpharma AB v. Implant Innovations, Inc. , 141 F.3d 1059, 1071 (Fed. Cir. 1998) (quoting PRE , 508 U.S. at 50). Given the focus on the act of filing the complai nt as the actionable event , CET’s infringement suits , though u nsuccessful, were not objectively baseless . This is because the state of the law of § 101 was deeply uncertain at the time CET filed its complaint s against Wells Fargo andCONTENT EXTRACTION v. WELLS FARGO BANK 14

PNC in 2012

. Compare Ultramercial, Inc. v. Hulu, LLC , 657 F.3d 1323, 1327

– 28 (Fed. Cir. 2011 ) (subsequently vacated ) , with Dealertrack , 674 F.3d at 1333

– 35

. See also CLS Bank Int’l v. Alice Corp. Pty Ltd. , 717 F.3d 1269, 1273 (Fed. Cir. 2013) (en banc) , cert. granted , 134 S. Ct. 734 (2013) , and aff’d , 571 U.S. __, 134 S. Ct. 2347 (2014). Under these circumstances, we cannot conclude that as a matter of law, no reasonable litigant in 2012 could have expected success on at least one of CET’s claims.

T he Supreme Court has held that “even unsuccessful but reasonably based suits advance some First Amen dment interests, ” and therefore should receive protection under the First Amendment

. BE & K , 536 U.S. at 532. Although we conclude the claims of CET’s asserted p atents are invalid under § 101 , we decline to find CET’s infringement suit s against Wells Fargo and PNC to be objectively baseless at the time they were filed

. Ther efore, s ince the act of filing its suit s w as shielded from liability by the Noerr

- Pennington doctrine, the district court correctly dismissed Diebold ’s tortious interference and RICO violation claims against CET

. C ONCLUSION
We affirm the district court’s grant of PNC’s motion to dismiss under FRCP 12(b)(6) on the ground that the claims of CET’s a sserted patents are invalid as patent

ineligible under § 101. Because CET’s infringement suit s against Wells Fargo and PNC w ere not objectively bas eless, we also affirm the district court’s dismissal of Diebold’s tortious interference and RICO violation claims

. Finally, b ecause the claims of CET’s asserted patents are invalid under § 101 , we need not reach the district court’s dismissal of Diebold’s request for a declaratory judgment of noninfringement and invalidity

. AFFIRMEDCONTENT EXTRACTION v. WELLS FARGO BANK 15

C OSTS
No costs.