CREDIT ACCEPTANCE CORP., Aрpellant v. WESTLAKE SERVICES, Appellee
2016-2001
United States Court of Appeals, Federal Circuit.
Decided: June 9, 2017
859 F.3d 1044
Without addressing whether the district court‘s dismissal order constituted the entry of a final judgment, we conclude that the court did not abuse its discretion by denying the motion as untimely. New World‘s explanation for seeking leave to amend was not the discovery of new evidence or anything similar. Rather, it believed its initial complaint was sufficient to establish jurisdiction, but that following the dismissal it wanted an opportunity to buttress its jurisdictional presentation.
That rationale does not provide a basis for concluding that the district court abused its discretion. The amendment was untimely, and New World offered no good reason for its untimeliness. See Vielma, 218 F.3d at 468 (“[W]e have consistently upheld the denial of leave to amend where the party seeking to amend has not clearly established that [it] could not reasonably have raised the new matter prior to the trial court‘s merits ruling.“).
New World relies exclusively on Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594 (5th Cir. 1981), in which the Fifth Circuit held that a trial court abused its discretion by denying leave to amend, which was requested after dismissal of the case. But the court‘s rationale in that case is not applicable here. In Dussouy, discovery revealed that the plaintiff‘s theory of the case—conspiracy between an insurance company and an investment company to restrain trade—was incorrect because the insurance company was not involved. Id. at 596-97. Upon learning that the insurance company was not involved, the plaintiff dismissed the insurance company and moved to amend the complaint to add different co-conspirators, a motion that the district court denied. Id. at 597. Thus, in Dussouy there was good reason for the belated motion to amend, in light of evidence that was revealed during discovery. Here, New World has not alleged the discovery of any new evidence that requires leave to amend.
After a case has been dismissed, a district court‘s denial of a motion to amend is not an abuse of discretion where the motion is based on the plaintiff‘s assertion that it thought it had done enough previously to avoid dismissal. As the district court astutely observed: “The only explanation [New World] offer[s] [in support of its motion for leave to amend] is that [it] thought [it] had adequately demonstrated jurisdiction. If this were sufficient, matters would never be final.”4
AFFIRMED
JOHN DAVID VAN LOBEN SELS, Fish & Tsang LLP, Redwood City, CA, argued for appellee. Also represented by JENNIFER SHIH.
SARAH E. CRAVEN, Office of the Solicitor, United States Patent аnd Trademark Office, Alexandria, VA, argued for intervenor Joseph Matal. Also represented by NATHAN K. KELLEY, FRANCES LYNCH, SCOTT WEIDENFELLER.
Before DYK, MAYER, and REYNA, Circuit Judges.
Opinion dissenting-in-part filed by Circuit Judge MAYER.
DYK, Circuit Judge.
Credit Acceptance Corp. (“CAC“) appeals the final written decision of the Patent Trial and Appeal Board (“Board“) in a Covered Business Method (“CBM“) review proceeding. The Board determined that claims 10-12 and 14-33 of CAC‘s U.S. Patent No. 6,950,807 B2 (“the ‘807 patent“) are directed to patent-ineligible subject matter under
BACKGROUND
CAC is the assignee of the ‘807 patent, which includes both system and method claims directed to “provid[ing] financing for allowing a customer to purchase a product selected from an inventory of products maintained by a dealer.” ‘807 patent, abstract. In one embodiment, the products are vehicles for sale at a car dealership. The invention involves, inter alia, “maintaining a database of the dealer‘s inventory,” gathering financing information from the customer, and “presenting a financing package to the dealer for each individual product in the dealer‘s inventory.” Id.
Certain claims, such as the claims at issue here, involve the application of these steps using elements such as a “database,” a “user terminal,” and a “server.” For example, representative claim 25 provides,
25. A system for generating financing packages provided by a financing party, for a customer purchase of a product from a dealer‘s inventory of a plurality of products, the system comprising:
a database for storing information related to products in the dealer‘s inventory including a dealer cost associated with each product;
a user terminal, communicatively coupled to said database, for receiving financial information about the customer in relation to said products; and
a server having access to the data in the database adapted to communicate with the user terminal over a network, whereby the financial information about the customer may be transmitted to the server,
the server generating a financing package for each product in the dealer‘s inventory and transmit financing terms for each financing package to the user terminal via the network for presentation to the user for immediate purchase, wherein the server is further configured such that the financing terms of each financing package include an advance amount to be paid to the dealer by said financing party if the customer purchases the product associated with the financing package.
‘807 patent, col. 15 ll. 17–38.
Relevant to this appeal are two CBM review proceedings involving the ‘807 patent and the same petitioner (Westlake). In the first proceeding, Westlake petitioned for CBM review of all claims (1-42) of the ‘807 patent, asserting that the claims are ineligible for patenting under
In its institution decision, the Board rejected CAC‘s argument that the existence of the first CBM proceeding estopped Westlаke from challenging claims 10-12 and 14-33 under
The first and second instituted CBM proceedings continued in parallel until March 24, 2015, when the Board issued a final written decision in the first proceeding concluding that claims 1-9, 13, and 34-42 of the ‘807 patent are unpatentable under
On January 25, 2016, the Board issued a final written decision in the second CBM proceeding concluding that claims 10-12 and 14-33 of the ‘807 patent are unpatentable under
CAC appeals that decision. It asserts that Westlake should have been estopped from maintaining its challenge to claims 10-12 and 14-33 and argues that the Board‘s § 101 decision was in error. Westlake opposes, and the United States Patent and Trademark Office (“PTO“) has intervened to support the Board‘s decision on all issues. We have jurisdiction pursuant to
DISCUSSION
I
CAC first argues that estoppel applies here to bar Westlake from challenging
PROCEEDINGS BEFORE THE OFFICE.—The petitiоner in a post-grant review of a claim in a patent under this chapter that results in a final written decision under section 328(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.
A
As a threshold matter, both Westlake and the PTO argue that a determination by the Board on
The PTO relies on
[W]e need not, and do not, decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that рresent other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.” Thus, ... we do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under § 112” in inter partes review.
Id. at 2141-42 (citations omitted).
Applying these principles, the Court held that the Federal Circuit may not re-
The estoppel provision at issue here, § 325(e)(1) (like the comparable IPR provision, § 315(e)(1)), is distinct from the issues addressed in Cuozzo. Specifically, § 325(e)(1) does not refer to “institution” decisions and in fact is not limited to institution decisions. While the appeal bar precludes review of a “request” for proceedings, which might be analogized to an institution decision, on its face, § 325(e)(1) contemplates that estoppel governs at any stage of a subsequent proceeding before the PTO—its application is not limited to the institution stage. Section 325(e)(1) provides that an estopped petitioner “may not request or maintain a proceeding before the office.” Id. (emphasis added). As the posture of this case demonstrates, in some situations § 325(e)(1) could operate to terminate a proceeding even where there existed no cause for termination at the time a petition was instituted (as was the case here).
We recently addressed similar language in pre-AIA
Moreover, the estoppel effect created by § 325(e)(1) after the Board issues a final written decision is not specifically directed to subsequent CBM proceedings; instead it applies generally to any “proceeding before the Office,”4 and AIA § 18(a)(1)(D) applies estoppel to subsequent district court and International Trade Commission (“ITC“) proceedings as well. As a practical matter, it would be inconsistent to hold that a Board decision on estoppel under § 325(e)(1) is nonappealable but that a decision on estoppel under the parallel provision applicable to district court and ITC proceedings is appealable.
Similar to § 325(e)(1), which applies to proceedings before the PTO, AIA § 18(a)(1)(D) provides,
[T]he petitioner in a [CBM] proceeding that results in a final written decision ... may not assert, either in a civil action arising in whole or in part under section 1338 of title 28, United States Code, or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), that the claim is invalid on any ground that the petitioner raised during that transitional proceeding.
There is no suggestion that this court lacks jurisdiction to consider estoppel issues stemming from a final written decision under this statute in the context of subsequent district court and ITC procеedings. Applying different appealability standards between the Board and district courts (and the ITC) could lead to conflicting outcomes. For instance, after a final written decision, if the petitioner raised identical arguments in both a subsequent CBM review and in district court and the Board and court reach different conclusions as to estoppel, only the court‘s decision would be appealable. And if, on appeal from the district court, the Federal Circuit were to decide contrary to the Board‘s conclusion, there is no clear mechanism for correcting the Board. This practical need for uniformity weighs strongly in favor of appealability.
For all of these reasons, the estoppel dispute in this case is neither a challenge to the Board‘s institution decision, nor is it “closely tied” to any “statute[] related to the Patent Office‘s decision to initiate [CBM] review.” Cuozzo, 136 S.Ct. at 2141.
Westlake nonetheless argues that this court may review only a final written decision of the Board, and the order denying CAC‘s motion to terminate is not a final written decision. This argument flows from
A party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) or 328(a) (as the case may be) may appeal the Board‘s decision only to the United States Court of Appeals for the Federal Circuit.
In GTNX, the Board instituted CBM review but later determined that its institution decision was in error. Id. at 1311. The Board vacated the institution decision and terminated review without issuing a final written decision. Id. The petitioner appealed. The court dismissed the appeal for lack of jurisdiction, characterizing the Board‘s vacatur decision as a decision whether to institute proceedings and holding that there was no appealable final written decision with respect to patentability within the meaning of
Here, the Board did issue a final written decision with respect to patentability, and CAC appeals that decision. Because the statute prohibits an estopped petitioner from “maintain[ing]” a proceeding, the Board necessarily found that Westlake was
We conclude that we have jurisdiction to review the CAC‘s estoppel argument regarding
B
We turn to the merits of CAC‘s estoppel argument. CAC points out that estoppel applies under
FINAL WRITTEN DECISION.—If a post-grant review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 326(d).
CAC‘s argument is foreclosed by our decision in Synopsys, which interpreted statutory language in the IPR context that is identical to language in the provisions governing CBM proceedings. As the Synopsys court recognized, “[t]he validity of claims for which the Board did not institute inter partes review can still be litigated in district court,” and this caused “no inconsistency” with the AIA estoppel provisions. 814 F.3d at 1316; see also
In Synopsys, we held that, under the statute and the PTO‘s regulations, the Board may institute an IPR on a claim-by-claim basis, such that “the Board cаn pick and choose among the claims in the decision to institute.” 814 F.3d at 1316. The court also explained that
Because a final written decision does not determine the patentability of non-instituted claims, it follows that estoppel does not apply to those non-instituted claims in future proceedings before the PTO. On its face, the relevant IPR estoppel statute,
This conclusion is reinforced by this court‘s decision in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016). In Shaw, the petitioner requested IPR of certain claims on three separate grounds. Id. at 1296. The Board instituted review on two of the grounds and denied the petition with respect to the third (the “Payne-based” ground). Id. at 1296-97. Later, the Board issued a final written decision upholding the claims over the two instituted grounds. Id. at 1297. On appeal, the court denied the petitioner‘s request for mandamus relief, explaining that the petitioner would not be estopped from pursuing a Payne-based challenge to the claims in future proceedings. Id. at 1300. The court explained that the IPR estoppel statute only applies to “any ground that the petitioner raised or reasonably could have raised during” the first review. Id. at 1300 (quoting
The holdings in Synopsys and Shaw with respect to IPRs apply to the PGR statutes and regulations as well since the PGR provisions contain identical language. Compare
CAC presents a host of policy arguments supposedly supporting a contrary result. “Such policy arguments are more properly addressed to legislators or administrators, not to judges.” Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 864, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); see also SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, — U.S. —, 137 S.Ct. 954, 967, 197 L.Ed.2d 292 (2017). In any event, these and similar concerns are adequately addressed by
We conclude that
II
CAC argues that the Board erred in determining that claims 10-12 and 14-33 of the ‘807 patent are ineligible for patenting. We review the Board‘s conclusions with respect to patent eligibility under § 101 de novo. Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1236 (Fed. Cir. 2016). “Whoever invents or discovers any
A
CAC asserts that claim 25, quoted above, is representative. Putting some of the generic computer elements aside, claim 25 is directed to a system for maintaining a database of information about the items in a dealer‘s inventory, obtaining financial information about a customer from a user, combining these two sources of information to create a financing package for each of the inventoried items, and presenting the financing paсkages to the user. Some claims contain additional details about the financing process: for example, the inventory database includes the dealer cost and sale price of each item; the customer information includes an available down payment amount; the system calculates a credit score for the customer; and the financing package includes a calculated front-end profit for the dealer, an advance amount, and a down payment amount (claim 10 as dependent from claim 1, claim 26).6
The Board determined that the claims are directed to the abstract idea of “processing an application for financing a purchase.” J.A. 16. We agree. Each of the claims is directed to the abstract idea of processing an appliсation for financing a purchase. We see no meaningful distinction between this type of financial industry practice and “the concept of intermediated settlement” held to be abstract in Alice, 134 S.Ct. at 2356, or the “basic concept of hedging” held to be abstract in Bilski v. Kappos, 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010).
Indeed, the ‘807 patent specification itself demonstrates that processing an application for financing a purchase is “a fundamental economic practice long prevalent in our system of commerce.” Alice, 134 S.Ct. at 2356 (quoting Bilski, 561 U.S. at 611). The background portion of the specification explains that “[u]nder present methods for selling cars and trucks,” “[t]he financing process begins with the salesperson ... completing a credit application. This involves receiving detailed financial information from the customer....” ‘807 patent, col. 1 ll. 23, 34-37. “The application typically also includes the price of the vehicle ..., the amount of the down payment ..., and ... the dealer‘s cost in obtaining the vehicle.... Once the application is completed, the salesperson sends the application to a lending institution for approval.” Id. col. 1 ll. 39-46. At
CAC suggests that the claims are not abstract because they “imрrove[] the functionality of the general purpose computer by programming fundamentally new features.” CAC Opening Br. 29. But this is so only in the sense that the claims permit automation of previously manual processing of loan applications. See id. at 27 (“There is no evidence of record that, prior to the ‘807 [p]atent, computers had been configured to automatically generate comprehensive reports of financing options. Instead, car dealerships secured financing for customers through ... [a] series of manual steps.” (citations omitted)). Our prior cases have made clear that mere automation of manual processes using generic computers does not constitute a patentable improvement in computer technology. In those cases, “the focus оf the claims is not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools.” Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016); see also In re TLI Commc‘ns LLC Patent Litig., 823 F.3d 607, 612 (Fed. Cir. 2016); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) (“At best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions.“). The invention‘s “communication between previously unconnected systems—the dealer‘s inventory database, a user credit information input terminal, and creditor underwriting servers,” CAC Opening Br. 28, does not amount to an improvement in computer technology.
This conclusion is supported—not contradicted—by Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). In Enfish, the court explained, “the first step in the Alice inquiry ... asks whether the focus of the claims is on the specific asserted improvement in computer capabilities ... or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are invоked merely as a tool.” Id. at 1335-36. The claims of the ‘807 patent are plainly of the second category. The “focus of the claims” is on the method of financing, and the recited generic computer elements “are invoked merely as a tool.” Id. The invention here is quite unlike the “self-referential table,” which was a “specific improvement to the way computers operate,” held to be not abstract in Enfish, 822 F.3d at 1336, and the “specific asserted improvement in computer animation, i.e., the automatic use of rules of a particular type” held to be not abstract in McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016).
CAC also asserts that claim 25 is not directed to an abstract financial process, but rather to “configuring a computer system to combine data from multiple electronic data sources ... to synthesize a comprehensive rеport of structures for a dealer and a creditor to co-finance a purchase.” CAC Opening Br. 26. But even under CAC‘s view, the claim is abstract under our precedent. We have explained that “collecting information, including when limited to particular content (which does not change its character as informa-
We have also explained that the output of data analysis can be abstract. “[M]erely presenting the results of abstract processes of collecting and analyzing information, without more (such as identifying a particular tool for presentation), is abstract as an ancillary part of such collection and analysis.” Elec. Power Grp., 830 F.3d at 1354. We have found particularly that data processing to facilitate financing is a patent-ineligible abstract concept. See Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1324 (Fed. Cir. 2016) (holding that claims are abstract where they “recite nothing more than the collection of information to generate a ‘credit grading’ and to facilitate anonymous loan shopping“); Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333-34 (Fed. Cir. 2012) (holding that a “computer-aided” method for “processing information through a clearinghouse” for car loan applications is patent ineligible).
B
At step two of the Alice framework, the Board concluded that the claims do not recite an inventive concept. Again, we agree. The use and arrangement of conventional and generic computer components recited in the claims—such as a database, user terminal, and server—do not transform the claim, as a whole, intо “significantly more” than a claim to the abstract idea itself. Alice, 134 S.Ct. at 2360; see also In re TLI Commc‘ns, 823 F.3d at 615 (holding that “vague, functional descriptions of server components are insufficient to transform the abstract idea into a patent-eligible invention“); Mortg. Grader, 811 F.3d at 1324 (holding no inventive concept where “the claims ‘add’ only generic computer components such as an ‘interface,’ ‘network,’ and ‘database‘“). “We have repeatedly held that such invocations of computers and networks that are not even arguably inventive are ‘insufficient to pass the test of an inventive concept in the application’ of an abstract idea.” Elec. Power Grp., 830 F.3d at 1355 (quoting buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1353 (Fed. Cir. 2014)).
CAC asserts that “[p]rior to the ‘807 [p]atent, because computers were unable to perform” the claimed process, “automobile financing was manual, iterative, and laborious.” CAC Opening Br. 9. Indeed, the specification explains that the iterative process, described above at step one, “of negotiating financing, especially with high risk borrowers, is labor intensive, difficult, and inefficient.” ‘807 patent, col. 2 ll. 51–53. CAC suggests that the invention solves this problem because it “provides software that allows computers to supplant and enhance” the existing series of manual steps of securing financing—“a task they were previously not configured to perform.” CAC Opening Br. 28.
But merely “configur[ing]” generic computers in order to “supplant and enhance” an otherwise abstract manual process is precisely the sort of invention that the Alice Court deemed ineligible for patenting. See Alice, 134 S.Ct. at 2357-59 (“[T]he relevant question is whether the claims here do more than simply instruct the practitioner to implement the abstract idea ... on a generic computer.“); see also RecogniCorp, LLC v. Nintendo Co., 855 F.3d 1322, 1328 (Fed. Cir. 2017) (explaining that a valid claim may not “tell a user to take an abstract idea and apply it with a
Significantly, the claims do not provide details as to any non-conventional software for enhancing the financing process. See Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1342 (Fed. Cir. 2017) (explaining that “[o]ur law demands more” than claim language that “provides only a result-oriented solution, with insufficient detail for how a computer accomplishes it“); Elec. Power Grp., 830 F.3d at 1354 (explaining that claims are directed to an abstract idea where they do not recite “any particular assertedly inventive technology for performing [conventional] functions“).
CAC also argues that the Board‘s decision is legally defective because the Board did not analyze the claim elements “as an ordered combination” to determine whether they recite an inventive concept. Alice, 134 S.Ct. at 2355. CAC calls our attention to this court‘s decision BASCOM Global Internet Services., Inc. v. AT & T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016), where the court explained that “an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.” Id. at 1350.
Contrary to CAC‘s suggestion, the Board properly considered the claimed elements as an ordered combination and determined that the claims did not recite an inventive concept. See, e.g., J.A. 23 (“We conclude that the generic computer components recited in claim 10 do not transform the nature of the claim such that claim 10, as a whole, recites an inventive concept.” (emphasis added)); J.A. 24 (“[C]laim 10 simply limits the method of claim 1 to a particular technological environment.... Claims 14 and 25 fare no better.“). Tellingly, CAC does not clearly identify any particular inventive concept in the ordered combination that it alleges the Board overlooked. Indeed, we see no inventive concept in these claims.
CONCLUSION
We conclude that Westlake was not estopped from maintaining this CBM under
AFFIRMED
COSTS
Costs to Appellee.
MAYER, Circuit Judge, dissenting-in-part.
While I agree that the challenged claims are patent ineligible under
In interpreting
We confronted an analogous situation in Husky. There, the board rejected the patent holder‘s argument that assignor estoppel barred institution of inter partes review. Id. at 1240-41. On appeal, we held that we had no jurisdiction to review whether the board correctly resolved the assignor estoppel question, explaining that the equitable doctrine of assignor estoppel is tied to the interpretation of
Just as we had no jurisdiction to review the board‘s application of assignor estoppel in Husky, we are likewise precluded from reviewing the board‘s application of the petitioner-specific estoppel рrovision at issue here. Like assignor estoppel, section 325(e)(1) estoppel only “implicates who may petition for review.” Husky, 838 F.3d at 1247. To hold that this court can review the board‘s application of section 325(e)(1) estoppel is an unwarranted jurisdictional extension, inconsistent with the broad and unequivocal statutory bar on review of institution decisions.