Court Opinion

ID: 4637266
Source: CourtListenerOpinion
Date Created: 2020-11-25 16:00:47.861208+00
Date Added: 2024-06-11T07:58:40.108469
License: Public Domain

Case: 20-1458    Document: 43    Page: 1   Filed: 11/25/2020

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                  FAST 101 PTY LTD.,
                   Plaintiff-Appellant

                            v.

          CITIGROUP INC., CITIBANK, N.A.,
                Defendants-Appellees
               ______________________

                        2020-1458
                  ______________________

     Appeal from the United States District Court for the
 District of Delaware in No. 1:19-cv-01819-RGA, Judge
 Richard G. Andrews.
                 ______________________

                Decided: November 25, 2020
                  ______________________

     ROBERT R. BRUNELLI, Sheridan Ross P.C., Denver, CO,
 for plaintiff-appellant. Also represented by MATTHEW
 CHRISTIAN HOLOHAN.

    JOHN MOEHRINGER, Cadwalader, Wickersham & Taft
 LLP, New York, NY, for defendants-appellees. Also repre-
 sented by HOWARD WIZENFELD.
                ______________________

    Before NEWMAN, LOURIE, and CHEN, Circuit Judges.
Case: 20-1458    Document: 43     Page: 2      Filed: 11/25/2020

2                          FAST 101 PTY LTD.   v. CITIGROUP INC.

 CHEN, Circuit Judge.
      Fast 101 Pty Ltd. (Fast 101) appeals from a decision of
 the United States District Court for the District of Dela-
 ware dismissing its complaint for failure to state a claim
 and denying its motion for leave to take targeted discovery
 and amend its complaint. The district court found that all
 claims of the asserted patents recite patent-ineligible sub-
 ject matter under 35 U.S.C. § 101. We affirm.
                        BACKGROUND
      Fast 101 brought suit against CitiGroup Inc. and Citi-
 bank, N.A. (collectively, Citi) alleging infringement of all
 claims of five of its patents: U.S. Patent Nos. 8,515,867
 (’867 patent), 8,660,947 (’947 patent), 8,762,273 (’273 pa-
 tent), 9,811,817 (’817 patent), and 10,115,098 (’098 patent)
 (collectively, the asserted patents). The asserted patents
 share a common written description and all relate “gener-
 ally to data processing systems, and more particularly, to
 electronic trading and settlement systems,” ’867 patent col.
 1 ll. 19–21. The asserted patents describe “an invoiceless
 trading system that creates incentives for customers to pay
 suppliers within a predetermined period of time, such as a
 settlement period.” Id. at abstract. This system “enables
 a customer to obtain a discount on orders placed with sup-
 pliers in return for an immediate payment.” Id. Claim 1
 of the ’867 patent is representative of all 234 asserted
 claims:
    1. A system configured for electronic settlement of
    an order placed by a customer with a supplier com-
    prising:
    one or more bank servers, at least one of the one or
    more bank servers receives a message related to
    the order, the message comprising at least an order
    amount;
    a database associated with at least one of the one
    or more bank servers that stores the order amount;
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 FAST 101 PTY LTD.   v. CITIGROUP INC.                       3

     one or more processors associated with at least one
     of the one or more bank servers that determines an
     incentive amount, wherein the incentive amount is
     determined based at least in part on one or more
     fiscal attributes of the customer and the order
     amount; and
     a payment gateway associated with at least one of
     the one or more bank servers, the payment gate-
     way electronically transfers to a supplier account
     on a first date an early payment for the order, the
     supplier account associated with the supplier,
     wherein the early payment is less than the order
     amount by at least the incentive amount, and the
     payment gateway that electronically receives a cus-
     tomer payment from a customer account on a sec-
     ond date, the customer account associated with the
     customer, wherein the customer payment is not
     less than the early payment plus an interest
     amount, wherein the interest amount is based at
     least in part on a credit period, wherein the credit
     period is an amount of time between the first date
     and the second date.
 Id. at claim 1; see also Fast 101 Pty Ltd. v. Citigroup Inc.,
 424 F. Supp. 3d 385, 387–88 (D. Del. 2020) (finding claim 1
 representative); Berkheimer v. HP Inc., 881 F.3d 1360,
 1365 (Fed. Cir. 2018) (“Courts may treat a claim as repre-
 sentative . . . if the patentee does not present any meaning-
 ful argument for the distinctive significance of any claim
 limitations not found in the representative claim.”).
     In response to Fast 101’s complaint, Citi filed a motion
 to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state
 a claim under which relief can be granted, arguing that all
 the asserted claims recite patent-ineligible subject matter
 under § 101. Fast 101 contended primarily in response
 that the asserted claims are valid and sought leave for tar-
 geted discovery and to amend its complaint. The district
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4                           FAST 101 PTY LTD.   v. CITIGROUP INC.

 court granted Citi’s motion to dismiss and denied Fast 101
 leave to amend and conduct targeted discovery.
      Applying the Supreme Court’s § 101 two-step inquiry
 from Alice Corp. Pty. Ltd. v. CLS Bank International, 573
 U.S. 208, 217–18 (2014), the district court reasoned that
 the asserted claims are directed to the abstract idea of “an
 intermediated settlement system” with “a discount for
 early payment.” Fast 101, 424 F. Supp. 3d at 390. The
 district court then concluded that “[n]one of the claimed el-
 ements, taken individually or as an ordered combination,
 provide the required inventive concept ‘sufficient to ensure
 that the patent in practice amounts to significantly more
 than a patent upon the ineligible concept itself.’” Id. at 392
 (citing Alice, 573 U.S. at 218). In denying Fast 101’s motion
 for leave, the district court explained that leave would “be
 futile.” Id. at 393. Fast 101 timely appealed. We have
 jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
                          DISCUSSION
      We apply the law of the regional circuit when reviewing
 a district court’s disposition of a motion to dismiss for fail-
 ure to state a claim. FairWarning IP, LLC v. Iatric Sys.,
 Inc., 839 F.3d 1089, 1092 (Fed. Cir. 2016). The Third Cir-
 cuit “review[s] de novo a district court’s grant of a motion
 to dismiss for failure to state a claim under Federal Rule of
 Civil Procedure 12(b)(6).” Ballentine v. United States, 486
 F.3d 806, 808 (3d Cir. 2007). We review de novo the deter-
 mination that a claim is directed to patent-ineligible sub-
 ject matter, Enfish, LLC v. Microsoft Corp., 822 F.3d 1327,
 1334 (Fed. Cir. 2016), and under Third Circuit law, we re-
 view “a district court’s denial of leave to amend [] for abuse
 of discretion,” City of Cambridge Ret. Sys. v. Altisource As-
 set Mgmt. Corp., 908 F.3d 872, 878 (3d Cir. 2018).
      Section 101 allows inventors to obtain patents on “any
 new and useful process, machine, manufacture, or compo-
 sition of matter, or any new and useful improvement
 thereof.” The Supreme Court, however, has held that
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 FAST 101 PTY LTD.   v. CITIGROUP INC.                       5

 certain categories of subject matter, including abstract
 ideas, are not eligible for patent protection under § 101.
 Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566
 U.S. 66, 70 (2012). “The abstract ideas category embodies
 the longstanding rule that an idea of itself is not patenta-
 ble.” Alice, 573 U.S. at 218 (internal brackets and quota-
 tion marks omitted). To determine whether claimed
 subject matter is patent eligible, we apply the two-step
 framework enumerated in Alice. Id. We first “determine
 whether the claims at issue are directed to a patent-ineli-
 gible concept.” Id. If so, we “examine the elements of the
 claim to determine whether it contains an inventive con-
 cept sufficient to transform the claimed abstract idea into
 a patent-eligible application.” Id. at 221 (internal quota-
 tion marks omitted) (quoting Mayo, 566 U.S. at 72, 80). At
 each step, the claims should be considered as a whole. See
 id. at 218 n.3, 225.
                                 A
     Applying Alice step one, we agree with the district
 court and Citi that the claims are directed to the abstract
 idea of an intermediated settlement system that employs a
 discount for early payment. As the district court explained,
 “[L]ike Alice, these claims describe a method of exchanging
 financial obligations between two parties by the use of a
 third-party intermediary.” Fast 101, 424 F. Supp. 3d at
 390. The asserted patents do, however, recite an element
 not found in the claims in Alice—an “incentive amount.”
 ’867 patent at claim 1. But we agree with the district
 court’s further finding that this incentive amount, or dis-
 count, describes nothing more than the abstract idea of cal-
 culating an amount based on fiscal attributes, see Fast 101,
 424 F. Supp. 3d at 390, just as we concluded in Mortgage
 Grader, Inc. v. First Choice Loan Services Inc., 811 F.3d
 1314, 1324 (Fed. Cir. 2016) (determining that generating a
 discounted loan price is an abstract idea). Fast 101 con-
 tends that the claims are directed to “an improved method
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6                          FAST 101 PTY LTD.   v. CITIGROUP INC.

 of obtaining an early payment for the supplier based on
 various attributes of the specific transaction using the
 claimed system,” Appellant’s Br. at 11–12, such improve-
 ments including “[i]ncreased cash flow” and “[c]ost reduc-
 tion through automation and paper reduction,” id. at 15
 (citation and internal quotation marks omitted). This ar-
 gument fails to persuade; the so-called improvements re-
 sulting from the claimed method are simply improvements
 attendant to using electronic systems. Contrary to Fast
 101’s contentions, these improvements do not demonstrate
 that the “[p]atents-in-[s]uit are drawn to a particular im-
 provement in the function of prior art technology, and thus
 properly not considered drawn to an abstract idea.” Id. at
 14 (citation, internal quotation marks, and brackets omit-
 ted).
                              B
      Under Alice step two, we conclude that the claims do
 not recite any inventive concept to render them patent eli-
 gible. Fast 101’s main argument on appeal is that the as-
 serted patents recite “numerous technical improvements to
 electronic trading systems,” id. at 19, including “special-
 ized gateway technology,” id. We disagree. Just as the dis-
 trict court concluded, the claims refer to nothing more than
 well-understood, routine, and conventional technology
 components. See Fast 101, 424 F. Supp. 3d at 392. The
 claimed payment gateway cannot be construed as special-
 ized in any sense. See id. at 391–92 and n.5 (explaining
 that the ’867 patent’s written description demonstrates an
 understanding that the gateway is nothing more than “con-
 ventional commercially-available browsers and products”).
                        CONCLUSION
     We have considered Fast 101’s remaining arguments
 and are unconvinced. Further, Fast 101 has failed to pro-
 vide any persuasive reason why the district court abused
 its discretion in denying leave to take targeted discovery
 and to amend because Fast 101 has not identified with
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 FAST 101 PTY LTD.   v. CITIGROUP INC.                       7

 specificity any additional factual allegations or claim con-
 structions that would render amendment and discovery not
 futile. We therefore affirm.
                           AFFIRMED