John J. Tharp, Jr., United States District Judge
This is a case in which the plaintiff seeks to enforce three related business method patents for a computer-assisted process of generating financial reports and news stories relating to selected data. The plaintiff, O2 Media, LLC ("O2 Media"), brings suit against the defendant, Narrative Science Inc. ("Narrative Science"), alleging patent infringement in violation of the Patent Act,
O2 Media is a holding company that publishes websites for investors and licenses content to institutional clients in the investment industry, such as Standard & Poors, Fidelity, TDAmeritrade, NASDAQ.com, and CBOE. Am. Compl. ¶ 1, ECF No. 8. O2 Media is the sole owner and assignee of U.S. Patent Nos. 7,856,390 ("'390 patent"), 8,494,944 ("'944 patent"), and 8,676,691 ("'691 patent"). Id. ¶ 6. The United States Patent and Trademark Office ("USPTO") issued the '390 patent, entitled "System, Report, and Method for Generating Natural Language News-based Stories," on December 21, 2010 (with a priority date of June 6, 2007). Id. ¶ 7. The '944 patent is a continuation-in-part of the '390 patent and was issued on July 23, 2013 (with a priority date for at least one of its claims of June 6, 2007). Id. ¶ 8. The '691 patent is the third in the family, issued on March 18, 2014 (also with a priority date for at least one of its claims of June 6, 2007). Id. ¶ 9. The patents "generally relate[] to a system, report, and method for automatically generating a series of natural language news-based stories to be presented via a digital interface or printed publication to a portfolio user." '390 Patent 2:58-61; '944 Patent 3:24-27; '691 Patent 3:24-27, ECF No. 1-1 Exs. A-C.
Narrative Science created data-driven communications software — Quill — that uses a computer interface to allow users to select and analyze data, to generate natural language narratives based on that data, and to disseminate those narratives on a large scale. Am. Compl. Ex. D. As such, it can be used to identify data relevant to a portfolio of financial instruments and to generate strategy reports and natural language news stories based on the selected data. Am. Compl. ¶ 17. Quill is available for use in a number of industries, including financial services, government, staffing services, marketing services, and sports. Id. ¶ 14. O2 Media claims that Narrative Science's software, "when used in some or all of its possible ways," infringes on O2's three patents at issue, that Narrative Science offers Quill to potential O2 Media clients, and that Narrative Science allows third parties to infringe the methods covered in the patents at issue. Id. ¶¶ 17-18.
O2 Media gave Narrative Science notice of its ownership of the patents at issue on March 25, 2015. Id. ¶ 19. Narrative Science did not thereafter obtain a license to use O2's patents nor did it cease offering Quill. Id. O2 Media filed suit in June 2015 alleging patent infringement and violation of
Narrative Science's motion to dismiss is premised on the basis that each of the patents at issue are directed to "abstract ideas" and are therefore invalid under 35 U.S.C. § 101. Section 101 of the Patent Act identifies the subject matter that is eligible for patent protection: "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." The Supreme Court has recognized, however, that § 101 "contains an important implicit exception [for l]aws of nature, physical phenomena, and abstract ideas...." Alice, 134 S.Ct. at 2354. For over 150 years the Court has recognized this exception as necessary to prevent monopolization of the "`basic tools of scientific and technological work'" that "`might tend to impede innovation more than it would tend to promote it,' thereby thwarting the primary object of the patent laws." Id. (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., ___ U.S. ___, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012)). Narrative Science maintains that the patents at issue are invalid because they claim the abstract idea of "using templates to write stories about selected topics." Mem. in Supp. 1, ECF No. 15.
A threshold question that O2 Media raises is whether this Court should determine the patents' validity under § 101 before claim construction. Resp. 8, ECF No. 21. Although it "will ordinarily be desirable — and often necessary — to resolve claim construction disputes prior to a § 101 analysis," Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273-74 (Fed.Cir.2012), claim construction is not necessary if the asserted claims, read most favorably to the patent holder, still describe an abstract idea. See Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1349 (Fed.Cir.2014) (endorsing the district court's construction of all claim terms "in the manner most favorable to [the patent holder]" in deciding § 101 eligibility on a motion to dismiss); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 719 (Fed.Cir.2014) (no formal claim construction required when "there was no reasonable construction that would bring [the claims] within patentable subject matter" (internal quotation marks omitted)). To overcome the presumption of validity of a patent claim under 35 U.S.C. § 282, a § 101 challenge must satisfy a "clear and convincing" standard. Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91, 131 S.Ct. 2238, 2242, 180 L.Ed.2d 131 (2011) ("We consider whether § 282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.").
Narrative Science's motion to dismiss is ripe for adjudication, then, so long as all terms in the patent claims are construed in the manner most favorable to O2 Media. Market Track, LLC v. Efficient Collaborative Retail Mktg., LLC, No. 14 C 4957, 2015 WL 3637740, at *2 (N.D.Ill. June 11, 2015), appeal dismissed (Sept. 8, 2015) (deciding 12(c) motion prior to claim construction, construing all terms in the light most favorable to the patent holder). The only two disputed terms identified by O2 Media are "template" and "news generating algorithm." O2 Media submits that "template" means "something that takes incoming data and creates new output data based on the incoming data," Resp. 9, and that "news generating algorithm" means "a six-step process that somebody must go
Although § 101 excludes "laws of nature, natural phenomena, and abstract ideas" from patent protection, inventions that "integrate" such laws, phenomena, or ideas "into something more" are patentable. Alice, 134 S.Ct. at 2354-55. In Mayo Collaborative Services v. Prometheus Laboratories., Inc., ___ U.S. ___, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012), the Supreme Court set forth a two-step test for deter-mining whether a claimed invention is sufficiently transformative to be a patentable application of such laws, phenomena, or abstract ideas. Id. at 1296-97. First, the court must determine whether the claims at issue are directed to the excluded content — i.e., a law of nature, natural phenomena, or abstract idea. Id.; see also Alice, 134 S.Ct. at 2355. If so, the court then determines whether there is an inventive concept: considering "the elements of each claim both individually and `as an ordered combination' [the court must] determine whether the additional elements `transform the nature of the claim' into a patent-eligible application." Alice, 134 S.Ct. at 2355 (quoting Mayo, 132 S.Ct. at 1297-98).
Shortly after crafting the two-step test in Mayo, the Supreme Court applied the test to computer-implemented methods in Alice, invalidating "a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk." Alice, 134 S.Ct. at 2356. Applying step one of the Mayo test, the Supreme Court concluded that the patented method was an abstract concept and noted that "the concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce." Id. (quoting Bilski v. Kappos, 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010)). Turning to the second step, the Court held that the claimed invention lacked any inventive concept and was little more than implementation of "the abstract idea of intermediated settlement on a generic computer." Alice, 134 S.Ct. at 2357-59. The Court made clear that adding computer-assisted automation to otherwise conventional processes does not supply a sufficiently inventive concept to satisfy the Mayo standard. To be an inventive concept, the claims must "do more than simply instruct the practitioner to implement the abstract idea ...on a generic computer," Alice, 134 S.Ct. at 2359, and must claim more than "the improved speed or efficiency inherent with applying the abstract idea on a computer." Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1367 (Fed.Cir.2015) (citing Bancorp Services, 687 F.3d at 1278 ("[T]he fact that the required calculations could be performed more efficiently via a computer does not materially alter the patent eligibility of the claimed subject matter.")). In applying the Mayo test, the Supreme Court reiterated its concern "`that patent law not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity." Alice, 134 S.Ct. at 2354 (quoting Mayo, 132 S.Ct. at 1301).
In Market Track, this Court recently summarized the application of the Mayo test in Alice and reviewed a number of post-Alice Federal Circuit decisions analyzing invalidity challenges to business method patents involving computer-assisted processes. Market Track, 2015 WL 3637740, at *3-5; see also Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., 758 F.3d 1344, 1350-51 (Fed. Cir.2014) (concluding that method claims
Alice and this torrent of subsequent Federal Circuit cases holding process and method patents invalid teach that district courts should "take Section 101 seriously, apply it early, and check the bona fides" of the concept underlying the patent. David Swetnam-Burland, Stacy O. Stitham, Alice's Adventures in Oz: Revealing the Man Behind the Curtain, 9 Akron Intell. Prop. J. 29, 44 (2015) (collecting post-Alice cases applying its two-part test). Heeding that lesson, district courts are applying the two-step Alice test to patents "at the motion to dismiss, motion for judgment on the pleadings, or summary judgment stages; doing so conscientiously and deliberatively; and reaching decisions that penetrate the often murky language in which patent
Turning to the patent claims at issue in this case, Narrative Science argues that Claim 1 of the '390 Patent is representative, Mem. in Supp. 2, whereas O2 Media argues that Claim 18 of the '390 Patent and Claim 6 of the '944 Patent are more favorable to the patent holder and, therefore, should be used as the representative claims. Resp. 5 (citing Content Extraction, 776 F.3d at 1349). Interpreting the terms and claims "in a manner most favorable to [the patent holder]," the Court begins its analysis with Claim 18 of the '390 Patent.
Claim 18 of the '390 Patent recites:
'390 Patent 9:26-10:34.
Claim 6 of the '944 Patent recites:
'944 Patent 11:28-12:6.
Under Mayo's first step, the Court looks to whether the claimed system is directed to an abstract idea. The claims describe an automated system that retrieves selected financial data from the Internet, analyzes and organizes that data, and produces an output file consisting either of a report recommending specific transactions or a natural language news story reporting and analyzing the relevant data. O2 Media concedes it is not claiming the software that converts the data into a
The identification, organization, and presentation of information is inarguably a building-block of the modern "information age." See Carl Shapiro & Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy 9 (2013) ("Improved information infrastructure has vastly increased our ability to store, retrieve, sort, filter, and distribute information, thereby greatly enhancing the value of the underlying information itself."). See also James Gleick, The Information: A History, a Theory, a Flood, Prologue (2011) ("The telephone, the fax machine, the calculator, and, ultimately, the computer are only the latest innovations devised for saving, manipulating, and communicating knowledge....Each new information technology, in its own time, set off blooms in storage and transmission. From the printing press came new species of information organizers: dictionaries, cyclopaedias, almanacs — compendiums of words, classifiers of facts...."). Information is only valuable if it is accessible and capable of dissemination, and improvements to the ease of access or dissemination enhance the value of existing information. Shapiro, supra, at 9. "The basic concept of selecting a useful subset of data from a larger stored pool of data, organizing it for review,
O2 Media appropriately takes issue with Narrative Science's description of the concept at the heart of the patent claims as "using templates to write stories about selected topics," both because (as noted above) the claims must be construed in the light most favorable to O2 Media and because that description ignores much of the claim language, but winning this battle of claim construction does not help O2 Media win the war. O2 Media maintains that the patent claims "do not define the inventions as using templates ... [in] identifying, organizing and presenting information," Resp. 13, but rather "describe an automated method for portfolio managers and others to expeditiously and efficiently obtain information related to particular topics of interest that would otherwise be diffused across the internet and then transform the collected information into an easy-to-understand, natural language format." Id. But that is just to say, at greater length, that the patents describe an automated method to identify ["obtain information related to particular topics of interest"], organize and analyze it ["transform the collected information"], and present it [in "an easy-to-understand, natural language format"]. Describing the process in more detail does not change the fact that the method claimed is actually quite basic and abstract: (1) find the relevant information; (2) organize and analyze it; and (3) present it in a usable format.
This is because step two of the Mayo test requires an inventive concept. A patent is not invalid simply because it is based upon an abstract idea; an application of an abstract idea that supplies an inventive concept can survive a § 101 challenge. That prior art references reveal that other patents may be based on the same generic processes does not mean that prior art patents are necessarily invalid by reason of their abstract foundation. As the Federal Circuit has explained, were the plaintiff's preemption argument accepted, "all a patentee would need do to insulate itself from a § 101 challenge would be to identify a single prior art reference in the specification and state that its invention improves upon that reference." Vehicle Intelligence & Safety, 2015 WL 9461707 at *3.
The mere fact that O2 Media's patents are based on an abstract concept does not mean that they are invalid. Under the second step of the Mayo analysis, this Court must determine whether the patents add "an inventive concept ... that is `sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.'" Alice, 134 S.Ct. 2347 (quoting Mayo, 132 S.Ct. at 1294). Although its brief raises two "inventive concepts," O2 Media raised an additional three "inventive concepts" at oral argument; the five asserted "inventive concepts" are: (1) generation of either a strategies page or a news stories page; (2) the manner in which the news stories page is created — i.e. inclusion of a date of publication and "a news item rewritten using very specific technology"; (3) the six-step algorithm; (4) the PTO's Notice of Allowance; and (5) the management tool. Resp. 15-18; see Oral Arg. Trans. 12:4-14:7, 17:8-20:1. The Court will address each in turn.
Although there are other systems permitting portfolio managers to access relevant financial data and present it in formats useful to their clients, O2 Media argues that the ability to review that data in multiple formats (the strategies page and the natural language page) is "novel and inventive and provides users
O2 Media next contends that the "manner in which the news stories page is created" is inventive because it includes a date of publication and uses "very specific technology." Resp. 17. Inclusion of a date of publication in a news piece, while useful and informative, is in no way inventive; news stories routinely include publication dates and search results for web browsers routinely display the publication dates for the items included in those results. The "very specific technology" claimed, moreover, isn't specific at all. The patent does not claim the software or equipment that would be employed to generate the news story; rather, it "contemplates all known methods of implementing on a central processor... using software having a method of creating natural language from text...." '390 Patent 6:3-6. So far as the patents are concerned, the technology that creates the natural language news stories is a black box created by someone else. The idea of creating natural language narratives with computers is of course not inventive — if it were, there would as yet be no software designed to do so. And there is nothing novel or particularly insightful about the idea of using natural language software specifically to create narratives relating to financial information. Why would it be? Financial reporting and analysis — both public and private — is a mainstream and indispensable feature of our modern economy.
Further, the six-step algorithm that O2 claims as an additional inventive concept, Resp. 17-18; Oral Arg. Trans. 13:1-14:7, 17:8-15, appears to be nothing more than a more detailed description of the process by which computer software creates natural language text. The news generating algorithm includes: "(1) sentence and paragraph reconstruction, (2) input variable with a data field, (3) a series of boilerplate sentences, (4) a system to repeat the boilerplate sentences in a round-robin method, (5) use of a parsing table, and (6) one of merging information, removing irrelevant data, conforming dates for convenience, and conforming dates for consistency." Resp. 18. This "ordered combination" of steps offers no inventive concept that is not already inherent in the concept on which natural language software is based, namely repeatedly massaging and manipulating text through an automated process until there is sufficient and appropriate variation to resemble natural language. As already explained, this reorganization of data using a combination of computer equipment and software is merely the implementation an abstract idea using generic computer functions. See Alice, 134 S.Ct. at 2359 ("[E]ach step does no more than require a generic computer to perform generic computer functions."); Intellectual Ventures, 792 F.3d at 1371 ("Requiring the use of a `software' `brain' 'tasked with
O2 Media also points to the PTO's Notice of Allowance as evidence that the patents set forth an inventive concept, Resp. 18-19, arguing that the ordered combination of claims, if insufficient individually, is sufficiently inventive as an ordered group. Id. Ex. B. That the PTO granted the patents is certainly not dispositive of the patents' validity, for the same is true in any case where an alleged infringer claims patent invalidity. See, e.g., Mayo, 132 S.Ct. at 1296. Moreover, the "ordered combination" addressed in the Notice of Allowance:
Resp. Ex. B 2, is merely a rewording of the uninventive six-step algorithm discussed and rejected above.
The last inventive concept O2 Media claims is the "management tool," which permits a user to select and filter from various options of what financial information to search and to include in the output page. See Oral Arg. Trans. 18:6-19:5. The management tool is similar to the '382 "interactive interface" claimed by the patent held to be invalid in Intellectual Ventures: it, too, presents customized webpage content based on user-specific information. 792 F.3d at 1365. Here, the tool to provide tailored information to the user involves nothing more than "the breakdown and organization of [ ] data according to some criteria, ... and the transmission of information derived from that [ ] data to a computer user, all through the use of conventional computer components, such as a database and processors, operating in a conventional manner." Id. (quoting Intellectual Ventures, No. 1:13-CV-00740 AJT, 2014 WL 1513273, at *3 (E.D.Va. Apr. 16, 2014)); see also Versata Dev., 793 F.3d at 1335 ("The steps in [plaintiff's] claims (e.g., arranging, storing, retrieving, sorting, eliminating, determining) are conventional, routine, and well-known. They involve the normal, basic functions of a computer."); Market Track, 2015 WL 3637740, at *8 ("Using a computer to display query results in a preselected format using prepackaged software is not the least bit inventive.").
In a final effort to demonstrate the inventiveness of its patents, O2 Media invokes the machine-or-transformation test. Resp. 19. The machine-or-transformation test looks to whether a claimed process (1) "is tied to a particular machine or apparatus," or (2) "transforms a particular article into a different state or thing." Ultramercial, 772 F.3d at 716. Although a § 101 analysis of patentable subject matter must follow the Mayo two-step framework, the machine-or-transformation test is still "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101." Bilski, 561 U.S. at 604, 130 S.Ct. 3218.
O2 Media claims that its inventions "scan information that is presently dispersed across the Internet, employ software and algorithms to locate information relevant to the end user, aggregate that information and transform the information into reports and natural language news-based stories." Resp. 19 (emphasis added). Merely invoking the word "transform" is insufficient to satisfy the test, however, especially when, as here, the "transformation" is solely converting existing data into a new form. See Bancorp Services, 687 F.3d at 1273 (affirming that "the claims do not effect a transformation, as they `do not transform the raw data into anything other than more data'"); Cyber-Source Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed.Cir.2011) ("The mere manipulation or reorganization of data, however, does not satisfy the transformation prong."); Market Track, 2015 WL 3637740, at *11 (The "manipulation of digital data, such as performing a relational
The remaining claims in the '390, '944, and '691 Patents are invalid "because all the claims are substantially similar and linked to the same abstract idea." Content Extraction, 776 F.3d at 1348. None of the limitations in the dependent claims narrows in any meaningful way the basic abstract idea at the heart of Claim 18 of the '390 Patent or Claim 6 of the '944 Patent (or the independent claims included therein). Each of the claim limitations, such as producing the result in the form of a computer file (Claim 10 of the '390 Patent), adding a header (Claim 19 of the '390 Patent), or selecting results from preset criteria (Claims 7 and 8 of the '944 Patent and the '691 Patent) are well-understood, routine, and conventional uses and configurations of databases. Like O2's suggested representative claims, nothing in the remaining claims is in any way inventive.
Thus, even when considered in a light most favorable to O2 Media, none of its patent claims amount to "significantly more" than the abstract idea of identifying financial data, organizing that data according to certain criteria, and presenting that information in a new format, all of which is implemented using generic computer functions. See Alice, 134 S.Ct. at 2347 (quoting Mayo, 132 S.Ct. at 1294). Because O2 Media's patents are directed to an abstract idea and lack any inventive concept, Narrative Science's motion to dismiss the patent infringement claim is granted.
O2 Media asserts that Narrative Science is engaging in deceptive trade practices, in violation of 815 ILCS 510/2(a)(5) and (12), by:
Am. Compl. ¶ 28. The Court has supplemental jurisdiction over this claim. Normally, when "all federal claims in a suit in federal court are dismissed [ ], the presumption is that the court will relinquish federal jurisdiction over any supplemental state-law claims." Al's Serv. Ctr. v. BP Products N. Am., Inc., 599 F.3d 720, 727 (7th Cir.2010). But here, where the supplemental state law claim turns on the very same issue that the court has already addressed, concerns of judicial economy and federal intrusion into areas of purely state law are minimized, and there is little reason not to address the state claim as well. See RWJ Mgmt. Co. v. BP Products N. Am., Inc., 672 F.3d 476, 479 (7th Cir.2012); see also Bailey v. City of Chicago, 779 F.3d 689, 696 (7th Cir.2015) cert. denied, ___ U.S. ___, 136 S.Ct. 200, 193 L.Ed.2d 129 (2015) (district court did not abuse discretion in retaining jurisdiction over state law claim post-dismissal of federal claim where both claims were based on the same set of facts). Narrative Science argues that this UDTPA claim is
O2 asserts that its UDTPA claim is not solely premised on Narrative Science's alleged patent infringement, but, rather, is directed at the potential consumer confusion regarding Narrative Science's lack of a license: "Plaintiff has alleged that Defendant is misleading parties who are familiar with Plaintiff and its patented methods into thinking that Defendant's software is produced under a valid license." Resp. 21. O2 Media has not explained why consumers would have believed that Narrative Science had a license from O2 Media; that assumption seems no more warranted than an assumption that no license was required (either because Narrative Science's product did not infringe any patent owned by O2 Media or because O2 Media's asserted patents were invalid). The Amended Complaint includes no allegations that Narrative Science misrepresented that it had a license or in any way implied that it had licensed O2's patents. Either way, because a UDTPA claim does not provide a cause of action for damages but solely for injunctive relief, see Chicago Dist. Council of Carpenters Pension Fund v. Reinke Insulation Co., 464 F.3d 651, 659 (7th Cir. 2006), and because O2 Media's patents are not valid, there is nothing for this Court to enjoin relevant to the UDTPA claim. See Madsen v. Dep't of Prof'l Regulation, No. 99 C 0344, 2000 WL 1222189, at *9 (N.D.Ill. Aug. 24, 2000) aff'd, 12 Fed.Appx. 382 (7th Cir.2001) (if there are no present or future violative actions, there is nothing for the Court to enjoin). Thus, O2 Media's UDTPA claim is dismissed for failure to state a claim.
For the reasons set forth above, the Court finds that all of the claims of U.S. Patent Nos. 7,856,390, 8,494,944, and 8,676,691 are invalid. Accordingly, the Court grants Narrative Science's motion to dismiss in its entirety.