Globalprivatequity.com, Inc. v. The Debt Exchange, Inc.

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

_______________________________________

)

GLOBALPRIVATEQUITY.COM, INC., )

)

Plaintiff, )

) Civil Action No.

v. ) 24-11481-FDS

)

THE DEBT EXCHANGE, INC., )

)

Defendant. )

_______________________________________)

MEMORANDUM AND ORDER ON

DEFENDANT’S MOTION TO DISMISS

SAYLOR, C.J.

This is an action for patent infringement. Plaintiff Globalprivatequity.com, Inc. (“GPE”)

has sued defendant The Debt Exchange, Inc. (“DebtX”) asserting claims under 35 U.S.C. § 271

for infringing three of its patents. The patents at issue concern a digital system for monitoring

and transacting in securities not listed on traditional exchanges.

DebtX has moved to dismiss the complaint for failure to state a claim upon which relief

can be granted. It contends that each asserted patent is directed to patent-ineligible subject

matter under 35 U.S.C. § 101.

For the following reasons, that motion will be granted.

I. Background

A. Factual Background

The facts are stated as set forth in the complaint unless otherwise noted.

1. The Parties

GPE is a Delaware corporation based in Pennsylvania. (Compl. ¶ 3). DebtX is a

Delaware corporation based in Massachusetts. (Id. ¶ 4). It owns and manages an online trading

platform for syndicated mortgage loans, a type of security not traded on traditional exchanges.

(Id. ¶ 12). The platform includes tools for evaluating those securities. (Id.).

2. Patents in Suit

The complaint alleges that the platform used by DebtX infringes three patents owned by

GPE: U.S. Patent No. 7,526,444 (“the ’444 patent”), U.S. Patent No. 7,877,319 (“the ’319

patent”), and U.S. Patent No. 8,694,418 (“the ’418 patent”). (Id. ¶ 2). The patents each concern

“a digital system for monitoring and transacting in securities not listed on traditional exchanges.”

(Id. ¶¶ 9-11, 28, 47, 66).

a. The ’444 Patent

The ’444 patent is titled “Integrated Trading Information Processing and Transmission

for Exempt Securities,” and was filed June 3, 2005. (’444 patent at Title). The patent concerns

“full digital sourcing, delivery, reporting and settlement for all alternative and exempt assets.”

(Id. col. 2 ll. 5-6). It states that it is “directed to a financial trading information processing and

transmission system” and that, under prior art, pricing and trading of alternative assets was not

standardized, efficient, or transparent. (Id. col. 1 ll. 18-19, 31-67).

The claimed invention is “a system for processing and transmitting trading information”

that involves four modules:

(a) a risk analytic module using the latest market prices and data provided by the

other two modules, (b) an auction module comprising a private asset auction

functionality and a two way trader workstation capability, with bid-offer and

unique asset price sourcing capabilities, (c) an asset or portfolio tracking module

to provide browser based, real-time consolidated reporting of multi-firm asset

positions (public or private), and (d) an out-of-band communications module

which alerts users/subscribers who may or may not be logged on the system via

fax, email, or text messages of a pending transaction being consummated or

achieved

(Id. col. 2 ll. 9-21). According to the patent, this system relies on “a computer network enabling

communication between a host computer and a plurality of remote bidders and sellers,” as well

as trade and account managers, and financial databases of inventory and bids. (Id. col. 2 ll. 31-

52).

The patent identifies its preferred embodiment as a “interactive electronic trading

information processing and transmission system” that “may be used for trading exempt securities

comprising whole loan pools on both a bulk and a flow basis . . . through either a bid/ask process

or a standing buy order.” (Id. col. 6 ll. 27-30, 35). In addition to loan pools, this system would

allow “trading exempt securities” generally, including in assets like “artwork, one-of-a-kind

collectables, antiques” and “like-kind exchanges.” (Id. col. 6 ll. 41, 58-60).

The patent includes two independent claims, Claim 1 and Claim 21. The complaint

alleges infringement of Claim 21. DebtX contends that Claim 1 is representative of all claims

the complaint asserts, including claims of the ’319 and ’418 patents, discussed below.

Claim 1 is as follows:

A system for monitoring and transacting exempt securities or assets not

otherwise listed, traded, valuated or bought/sold in any conventional exchange

or system for the regulation of securities or commodities via a global

information network, comprising:

memory for storing software and a processor for executing the software;

an asset analytic software module for statistically analyzing at least one

exempt security or asset not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities based upon a model selected by a user or a price

data source selected by the user from a price data database;

an asset track software module for collecting at least one of price data,

valuation data, and market data related to the at least one exempt security

or asset not otherwise listed, traded, valuated or bought/sold in any

conventional exchange or system for the regulation of securities or

commodities asset being analyzed;

an asset information communication software module for providing the user

inventory data of exempt securities or assets not otherwise listed, traded,

valuated or bought/sold in any conventional exchange or system for the

regulation of securities or commodities available to the user, accepting a

selection of the at least one exempt security or asset not otherwise listed,

traded, valuated or bought/sold in any conventional exchange or system

for the regulation of securities or commodities from the user, providing the

user at least one of the price data, the valuation data, and the market data

related to the at least one exempt security or asset not otherwise listed,

traded, valuated or bought/sold in any conventional exchange or system

for the regulation of securities or commodities from the asset track

software module, interfacing with the asset analytic software module for

statistically analyzing the at least one exempt security or asset not

otherwise listed, traded, valuated or bought/sold in any conventional

exchange or system for the regulation of securities or commodities, and

providing the user a result of the statistical analysis related to the at least

one exempt security or asset not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities; and

an asset access software module for providing transactional access to conduct

at least one of bidding to buy, offering to sell and auctioning transactions

in connection with the at least one exempt security or asset not otherwise

listed, traded, valuated or bought/sold in any conventional exchange or

system for the regulation of securities or commodities being analyzed.

(Id. col. 20 l. 43 – col. 21 l. 27).

Claim 21 is as follows:

A method for monitoring and transacting exempt securities or assets not

otherwise listed, traded, valuated or bought/sold in any conventional exchange

or system for the regulation of securities or commodities via a global

information network, comprising the steps of:

statistically analyzing by a computer at least one exempt security or asset not

otherwise listed, traded, valuated or bought/sold in any conventional

exchange or system for the regulation of securities or commodities based

upon a model selected by a user or a price data source selected by the user

from a price data database;

collecting by a computer at least one of price data, valuation data, and market

data related to the at least one exempt security or asset not otherwise

listed, traded, valuated or bought/sold in any conventional exchange or

system for the regulation of securities or commodities being analyzed;

providing the user by a computer, inventory data of exempt securities or assets

not otherwise listed, traded, valuated or bought/sold in any conventional

exchange or system for the regulation of securities or commodities

available to the user, accepting a selection of the at least one exempt

security or asset not otherwise listed, traded, valuated or bought/sold in

any conventional exchange or system for the regulation of securities or

commodities from the user, providing the user at least one of the price

data, the valuation data, and the market data related to the at least one

exempt security or asset not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities, and providing the user a result of the statistical

analysis related to the at least one exempt security or asset not otherwise

listed, traded, valuated or bought/sold in any conventional exchange or

system for the regulation of securities or commodities; and

providing by a computer transactional access to conduct at least one of

bidding to buy, offering to sell and auctioning transactions in connection

with the at least one exempt security or asset not otherwise listed, traded,

valuated or bought/sold in any conventional exchange or system for the

regulation of securities or commodities asset being analyzed.

(Id. col. 22 l. 65 – col. 23 l. 39).

b. The ’319 Patent

The ’319 patent, like the ’444 patent, is titled “Integrated Trading Information Processing

and Transmission System for Exempt Securities.” (’319 patent at Title). It was filed March 13,

2009. (Id.). Its specification is essentially identical to that of the ’444 patent. It differs only in

the language of its asserted claims, and even so, the claims are very similar. (Id. cols. 1-24).

The patent includes two independent claims, Claim 1 and Claim 22. The complaint

asserts that DebtX infringed Claim 22.

Claim 22 provides as follows:

A method for monitoring and transacting exempt securities or assets not

otherwise listed, traded, valuated or bought/sold in any conventional exchange

or system for the regulation of securities or commodities via a global

information network, comprising the steps of:

statistically analyzing, by a computer, at least one exempt security or asset not

otherwise listed, traded, valuated or bought/sold in any conventional

exchange or system for the regulation of securities or commodities based

upon a model selected by a user or a price data source selected by the user

from a price data database;

collecting, by a computer, at least one of price data, valuation data, and

market data related to the at least one exempt security or asset not

otherwise listed, traded, valuated or bought/sold in any conventional

exchange or system for the regulation of securities or commodities being

analyzed;

providing the user, by a computer, inventory data of exempt securities or

assets not otherwise listed, traded, valuated or bought/sold in any

conventional exchange or system for the regulation of securities or

commodities available to the user, accepting a selection of the at least one

exempt security or asset not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities from the user, providing the user at least one of

the price data, the valuation data, and the market data related to the at least

one exempt security or asset not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities, and providing the user a result of the statistical

analysis related to the at least one exempt security or asset not otherwise

listed, traded, valuated or bought/sold in any conventional exchange or

system for the regulation of securities or commodities or an

algorithmically produced potential bid/offer match for the at least one

exempt security or asset not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities; and

providing, by a computer, transactional access to conduct at least one of

bidding to buy, offering to sell and auctioning transactions in connection

with the at least one exempt security or asset not otherwise listed, traded,

valuated or bought/sold in any conventional exchange or system for the

regulation of securities or commodities asset being analyzed or the at least

one exempt security or asset not otherwise listed, traded, valuated or

bought/ sold in any conventional exchange or system for the regulation of

securities or commodities that are part of the algorithmically produced

potential bid/offer match.

(Id. col. 22 l. 65 – col. 24 l. 15).

c. The ’418 Patent

The ’418 patent is also titled “Integrated Trading Information Processing and

Transmission System for Exempt Securities.” (’418 patent at Title). It was filed on July 9, 2013.

(Id.) Its specification is identical to the specifications of the ’444 and ’319 patents. (Id. cols. 1-

24). Its claims are also very similar to those of the ’444 and ’319 patents.

The patent includes two independent claims, Claim 1 and Claim 18. The complaint

asserts that DebtX infringed Claim 1.

Claim 1 provides as follows:

A method for monitoring and/or transacting, via an electronic network,

exempt securities or assets not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities comprising the steps of:

analyzing, using a microprocessor, at least one of the exempt securities or

assets not otherwise listed, traded, valuated or bought/sold in any

conventional exchange or system for the regulation of securities or

commodities;

collecting, using a microprocessor, data related to the at least one of the

exempt securities or assets not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities being analyzed;

accepting from a first user, using a microprocessor, information regarding a

new offer to buy or sell the at least one of the exempt securities or assets

not otherwise listed, traded, valuated or bought/sold in any conventional

exchange or system for the regulation of securities or commodities;

posting, using a microprocessor, the new offer to buy or sell the at least one of

the exempt securities or assets not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities for viewing by at least one user of the electronic

network;

querying, using a microprocessor, one or more financial inventory databases

of pending offers to buy or sell one or more of the exempt securities or

assets not otherwise listed, traded, valuated or bought/sold in any

conventional exchange or system for the regulation of securities or

commodities to determine whether one or more of the pending offers to

buy or sell match the new offer to buy or sell accepted from the first user;

automatically transmitting a notification, upon finding a match, using a

microprocessor, to one or more second users of the electronic network

associated with the one or more pending offers to buy or sell of the match

based upon notification preferences defined by the one or more second

users;

storing, using a microprocessor, the new offer to buy or sell the at least one of

the exempt securities or assets not otherwise listed, traded, valuated or

bought/sold in any conventional exchange or system for the regulation of

securities or commodities in at least one of a bid data base and the

financial inventory database; and

providing, using a microprocessor, transactional access to conduct a sale or

transfer of the at least one of the exempt securities or assets not otherwise

listed, traded, valuated or bought/sold in any conventional exchange or

system for the regulation of securities or commodities associated with the

new offer to buy or sell.

(Id. col. 20 l. 65 – col. 21 l. 49).

B. Procedural Background

On June 6, 2024, GPE filed this action against DebtX. (ECF 1). The complaint asserts

three counts under 35 U.S.C. § 271: infringement of Claim 21 of the ’444 patent (Count 1);

infringement of Claim 22 of the ’319 patent (Count 2); and infringement of Claim 1 of the ’418

patent (Count 3).

DebtX has moved to dismiss the complaint for failure to state a claim upon which relief

can be granted. It contends that each asserted patent is directed to patent-ineligible subject

matter under 35 U.S.C. § 101.

II. Legal Framework

A. Legal Standard

To survive a motion to dismiss, a complaint must state a claim that is plausible on its

face. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). For a claim to be plausible, the

“[f]actual allegations must be enough to raise a right to relief above the speculative level . . . .”

Id. at 555 (internal citations omitted). “The plausibility standard is not akin to a ‘probability

requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556). When

determining whether a complaint satisfies that standard, a court must assume the truth of all well-

pleaded facts and give the plaintiff the benefit of all reasonable inferences. See Ruiz v. Bally

Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing Rogan v. Menino, 175 F.3d 75,

77 (1st Cir. 1999)). Dismissal is appropriate if the complaint fails to set forth “factual

allegations, either direct or inferential, respecting each material element necessary to sustain

recovery under some actionable legal theory.” Gagliardi v. Sullivan, 513 F.3d 301, 305 (1st Cir.

2008) (quoting Centro Medico del Turabo, Inc. v. Feliciano de Melecio, 406 F.3d 1, 6 (1st Cir.

2005)).

Whether a claim is drawn to patent-eligible subject matter under 35 U.S.C. § 101 is an

issue of law. Genetic Techs. Ltd. v. Merial LLC, 818 F.3d 1369, 1373 (Fed. Cir. 2016). Courts

may therefore decide the issue of § 101 patent-eligibility at the pleadings stage. See, e.g.,

Rothschild Digital Confirmation, LLC v. Skedulo Holdings Inc., 2020 WL 1307016, at *2 (N.D.

Cal. Mar. 19, 2020). But “like many legal questions,” determining eligibility under § 101 can

involve “subsidiary fact questions”—in particular, the second step of the Alice/Mayo test, which

asks whether a patent’s claims contain a sufficiently inventive concept. See Aatrix Software, Inc.

v. Green Shades Software, Inc., 882 F.3d 1121, 1128 (Fed. Cir. 2018). Thus, while the Federal

Circuit has held that “patent eligibility can be determined at the Rule 12(b)(6) stage,” it has also

cautioned that “[t]his is true only when there are no factual allegations that, taken as true, prevent

resolving the eligibility question as a matter of law.” Id. at 1125.

B. Statutory Framework

An invention is generally patentable if it qualifies as a “new and useful process, machine,

manufacture, or composition of matter.” 35 U.S.C. § 101. However, “this provision contains an

important implicit exception. Laws of nature, natural phenomena, and abstract ideas are not

patentable.” Mayo Collaborative Servs. v. Prometheus Labs. Inc., 566 U.S. 66, 70 (2012)

(internal quotation marks and citations omitted). When applying that exception, a court “must

distinguish between patents that claim the building blocks of human ingenuity and those that

integrate the building blocks into something more.” Alice Corp. v. CLS Bank Intern., 573 U.S.

208, 217 (2014) (internal quotation marks, alterations, and citations omitted).

The framework for making that distinction comprises two steps. At step one, the court

determines “whether the claims at issue are directed to one of those patent-ineligible concepts”

that is so abstract as to “risk disproportionately tying up the use of [] underlying ideas.” Id. at

217 (quoting Mayo, 566 U.S. at 73). If the claims at issue are directed to a patent-ineligible

concept, the court continues to step two. See id. At step two, the court looks for an “inventive

concept,” namely “an element or combination of elements that is sufficient to ensure that the

patent in practice amounts to significantly more than a patent upon the ineligible concept itself.”

Id. at 217-18 (internal quotation marks, alterations, and citations omitted). If the claims lack an

inventive concept, then the patent claims subject matter that is not patent-eligible, and the claims

are therefore invalid.

III. Analysis

A. Representative Claim

As an initial matter, the Court must determine which claims are representative—that is,

which claims are the proper focus of analysis in order to resolve the pending motion. DebtX

contends that Claim 1 of the ’444 patent is representative not just of the ’444 patent claim, but

also of the ’319 and ’418 patent claims.

“Courts may treat a claim as representative in certain situations, such as if the patentee

does not present any meaningful argument for the distinctive significance of any claim

limitations not found in the representative claim or if the parties agree to treat a claim as

representative.” Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018) (citing Electric

Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1352 (Fed. Cir. 2016); Intellectual Ventures I

LLC v. Symantec Corp., 838 F.3d 1307, 1316 & n.9 (Fed. Cir. 2016)). In the context of

challenges to patent eligibility under § 101, claims are representative if they are “substantially

similar and linked to the same abstract idea.” Content Extraction & Transmission LLC v. Wells

Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1348 (Fed. Cir. 2014)

The parties have not agreed to treat Claim 1 of the ’444 patent as representative of the

asserted claims. However, GPE makes no argument that Claim 21 of the ’444 patent should be

treated as distinct from Claim 1 of the ’444 patent. It makes a general claim that the ’319 patent

ought to be treated distinctly from the ’444 patent, but in support points only to verbatim overlap

between the two patents. (ECF 12 at 13-14). Accordingly, the Court will treat the

representativeness issue as conceded as to those two asserted claims. See Berkheimer, 881 F.3d

at 1365.

DebtX has also clearly demonstrated that Claim 1 of the ’418 patent possesses no

limitation distinct from those of Claim 1 of the ’444 patent. As an initial matter, and as DebtX

indicates, the specification for each of the patents is identical, and there appears to be substantial

overlap between the asserted claims. In response, GPE points to a set of limitations in Claim 1

of the ’418 patent it contends are distinct from limitations found in Claim 1 of the ’444 patent.

Specifically, it contends that there is no analog to the “posting,” “querying,” “automatically

transmitting,” and “storing” limitations from ’418 Claim 1 in ’444 Claim 1. But that assertion is

entirely bare and unpersuasive.

The “posting” limitation from ’418 Claim 1 can be mapped directly to the “asset access”

limitation of ’444 Claim 1. Compare ’418 Patent, col. 21 ll. 18-23 (“posting, using a

microprocessor, the new offer to buy or sell . . . for viewing by at least one user of the electronic

network”) with ’444 Patent, col. 21, ll. 21-23 (“providing transactional access to conduct at least

one of bidding to buy, offering to sell and auctioning transactions”). Similarly, the “querying”

limitation from ’418 Claim 1 can be mapped onto parts of both the “asset access” and “asset

information” limitations of ’444 Claim 1. Compare ’418 Patent, col. 21 ll. 24-31 (“querying,

using a microprocessor, one or more financial inventory databases of pending offers to buy or

sell . . . to determine whether one or more of the pending offers to buy or sell match the new

offer to buy or sell accepted from the first user”) with ’444 Patent col. 20 l. 64 – col. 21 l. 6

(“providing the user inventory data of [securities]. . . accepting a selection of the [security] from

the user, providing the user at least one of the price data, the valuation data, and the market data

related to the [security]”) and ’444 Patent col. 21 ll. 21-23 (“providing transactional access to

conduct at least one of bidding to buy, offering to sell and auctioning transactions”).

The “storing” limitation from ’418 Claim 1 is cross-hatched from the limitations of ’444

Claim 1. Compare ’418 Patent, col. 21 ll. 38-43 (“storing, using a microprocessor, the new offer

to buy or sell . . . in at least one of a bid database and the financial inventory database”) with

’444 Patent col. 20 ll. 48-49, col. 21 ll. 21-23 (“memory for storing software and a processor for

executing the software,” including software that “provid[es] transactional access to conduct at

least one of bidding to buy, offering to sell and auctioning transactions”).

Finally, the “automatically transmitting” limitation of the ’418 patent is not meaningfully

distinct from the “asset access” limitation of the ’444 patent. Because notifications are ordinarily

automatic unless they are delayed or batched, the “automatic” nature of the notification

contemplated by ’418 Claim 1 does not differ materially from the “notification function to notify

a user in connection with a matching offer to sell, bid to buy or auction high bid” contemplated

as part of the asset access module in ’444 Claim 1. See ’418 Patent col. 21 ll. 32-37; ’444 Patent

col. 21 ll. 21-27, col. 22 ll. 4-8.

Accordingly, because GPE “does not present any meaningful argument for the distinctive

significance of any claim limitations not found in the representative claim[s],” the Court will

treat Claim 1 of the ’444 patent as representative of Claim 21 of the ’444 patent, Claim 22 of the

’319 patent, and Claim 1 of the ’418 patent. Berkheimer, 881 F.3d at 1365.

B. Patent Eligibility

DebtX contends that GPE’s infringement claims fail as a matter of law because Claim 1

of the ’444 patent, as representative of the asserted claims in the ’444, ’319, and ’418 patents, is

not patent-eligible. DebtX asserts principally that monitoring and transacting in securities not

listed on traditional exchanges is an abstract idea, and that GPE’s patents add only generic

computer functionality to this idea, which is insufficiently inventive to make the idea patent-

eligible.

1. Step One: Patent-Ineligible Concept

DebtX contends that Claim 1 of the ’444 patent is directed to the abstract idea of

“monitoring and transacting in securities not listed on a conventional exchange.” (ECF 11 at

14). GPE characterizes all three of the asserted patents using that same language, but contends

that the concept is patent-eligible because it is “an advance in computerized trading of exempt

securities” and because it creates “functionality that was not provided under prior art.” (ECF 12

at 10, 11).

The Supreme Court has repeatedly held that “fundamental economic practice[s] long

prevalent in our system of commerce” are patent-ineligible abstract ideas. Bilski v. Kappos, 561

U.S. 593, 611 (2010) (holding that a patent describing a method for hedging financial risk was

directed to an abstract idea); see Alice, 573 U.S. at 221 (holding that a patent describing a

method of intermediated settlement and digital system for implementing it was directed to an

abstract idea). Conventional business practices, especially those fundamental enough to be

“taught in any introductory finance class,” are “squarely within the realm of ‘abstract ideas.’”

Alice, 573 U.S. at 221. The fact that a patent limits a conventional business practice to a

particular subset of possible applications does not alter its character as an abstract idea. See

Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (“Although certain

additional limitations, such as consulting an activity log, add a degree of particularity, the

concept embodied by the majority of the limitations describes only the abstract idea of showing

an advertisement before delivering free content.”); cf. Elec. Power Grp., 830 F.3d at 1353

(“[W]e have treated collecting information, including when limited to particular content (which

does not change its character as information), as within the realm of abstract ideas.”). Similarly,

“generic computer implementation” of an abstract idea “fail[s] to transform that abstract idea

into a patent-eligible invention.” Alice, 573 U.S. at 221.

Claim 1 of the ’444 patent is, on its face, directed to the idea of an exchange—that is, a

centralized location for buyers and sellers to meet and conduct transactions. That is the type of

fundamental business practice deemed patent-ineligible in Bilski and Alice. The claimed

invention is “[a] system for monitoring and transacting exempt securities or assets . . .

comprising,” among other things, “an asset access software module for providing transactional

access to conduct at least one of bidding to buy, offering to sell and auctioning transactions in

connection with the at least one exempt security or asset . . . being analyzed.” (’444 Patent, col.

20 l. 43 – col. 21 l. 27). This purported invention—a system for monitoring and transacting in a

particular asset by providing access to buyers, sellers, and auctions—describes not only

contemporary commodity or stock exchanges, but also the long-established (indeed, ancient)

practice of conducting business through a centralized marketplace.

This concept is not just “taught in any introductory finance class,” it is one of the

fundamental organizing ideas of such a course. Alice, 573 U.S. at 221. In fact, the ideas the

Supreme Court deemed too abstract to be patent-eligible in Alice and Bilski—hedging financial

risk and intermediated settlement—are predicated on the even more basic idea that there is a

marketplace in financial assets; that is, a place to go to obtain information concerning the market

and to make trades. This claim, like those claims, falls “squarely within the realm of ‘abstract

ideas.’” Id.

The fact that the patent applies this idea to asset classes not traded on conventional

exchanges does not alter its fundamental character as an exchange. See Ultramercial, 772 F.3d

at 715. And the digital character of the claimed trading platform, including its implementation in

software modules and through data memory and processors, does not change the calculus. See

Alice, 573 U.S. at 221. At bottom, the patent is claiming the abstract idea of creating or

operating an exchange for exempt securities or assets.

The Federal Circuit has “repeatedly held” that “collecting, analyzing, and displaying

data” are “abstract concepts.” CardioNet, LLC v. InfoBionic, Inc., 816 F. App’x 471, 475 (Fed.

Cir. 2020) (citing Electric Power Grp., 830 F.3d at 1353-54; Content Extraction, 776 F.3d at

1347). The Federal Circuit has also specifically held that “a purportedly new arrangement of

generic information that assists traders in processing information more quickly” does not

transform an underlying abstract idea into a patent-eligible one. Trading Techs. Int'l, Inc. v. IBG

LLC, 921 F.3d 1084, 1093 (Fed. Cir. 2019).

To the extent that any elements of Claim 1 are not functional components of a digital

exchange, they relate to the display and analysis of trading information. The claim describes

software that gathers data (“collecting at least one of price data, valuation data, and market data

related to the at least one exempt security or asset”); analyzes that data (“statistically analyzing at

least one exempt security or asset . . . based upon a model selected by a user or a price data

source selected by the user from a price data database”); and shows the results (“providing the

user inventory data of exempt securities or assets,” “providing the user at least one of the price

data, the valuation data,” and “providing the user a result of the statistical analysis related to the

at least one exempt security or asset”). (’444 Patent, col. 20 l. 50 – col. 21 l. 20). These

“abstract concepts” do nothing to alter the abstract character of the underlying claimed

invention—a digital exchange for certain types of assets. See Electric Power, 830 F.3d at 1353-

54 (collecting cases). It does not recite “inventive technology for performing those functions.”

Id. at 1354; see also Trading Techs., 921 F.3d at 1384-85 (“[T]he claimed steps for calculating

the P&L values . . . is nothing more than mere automation of manual processes using generic

computers, which does not constitute a patentable improvement in computer technology. . . .

[T]he claims here fail because arranging information along an axis does not improve the

functioning of the computer, make it operate more efficiently, or solve any technological

problem.” (internal quotation marks and citations omitted)); CardioNet, 816 Fed. App’x at 475

(“[T]he claims and specifications treat those steps as conventional processes, and therefore the

claims cannot be said to require anything more than generic data analysis. . . . [M]erely

displaying data by conventional methods as part of a series of abstract steps is itself an abstract

concept.”).

Accordingly, the Court finds that Claim 1 of the ’444 patent is directed to the abstract

concept of “monitoring and transacting in securities not listed on traditional exchanges”—that is,

operating an exchange for non-exchange-traded assets.

2. Step Two: Inventive Concept

The Court must next examine the elements of Claim 1 to determine whether it contains

an “inventive concept sufficient to transform the claimed abstract idea into a patent-eligible

application.” Alice, 573 U.S. at 221 (internal quotation marks omitted). A court “consider[s] the

elements of each claim both individually and as an ordered combination.” Id. at 217 (internal

quotation marks omitted). The inquiry searches for “an element or combination of elements that

is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon

the ineligible concept itself.” Id. at 217-18 (internal quotation marks and alteration omitted).

“An inventive concept reflects something more than the application of an abstract idea using

‘well-understood, routine, and conventional activities previously known to the industry.’”

Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1316 (Fed. Cir. 2019) (quoting Aatrix Software,

882 F.3d at 1128). “The question of whether a claim element or combination of elements is

well-understood, routine and conventional to a skilled artisan in the relevant field is a question of

fact.” Berkheimer, 881 F.3d at 1368.

The complaint does not plausibly allege that the elements of Claim 1 of the ’444 patent,

when considered collectively, contain an inventive concept sufficient to transform the abstract

idea into a patent-eligible application. Step two of the Alice framework ordinarily involves

factual questions that must be resolved in plaintiff’s favor on a motion to dismiss under Rule

12(b)(6). But here, the complaint makes no factual allegations at all about the patents in suit,

other than that they exist. (ECF 1). Merely alleging that a patent was issued does not raise

factual issues as to an inventive concept, because it does not identify “how the specific

techniques recited in the claims [are] inventive.” Dropbox, Inc., 815 F. App’x 529, 538 (Fed.

Cir. 2020) (citing Cellspin Soft, 927 F.3d at 1317-18). Accordingly, dismissal is appropriate

unless Claim 1 of the ’444 patent on its face contains an inventive concept.

Claim 1 appears only to arrange generic technological components to circumscribe the

abstract idea of an exchange substitute for non-exchange-traded assets without yielding any

technological benefits or industry improvements. It invokes programs that match buyers and

sellers, conduct statistical analyses, choose price models, and search financial databases—all of

which are all functions performed by generic computer components. Furthermore, merely

invoking those programs does not purport to solve any of the technological or pragmatic

problems associated with providing such services for bespoke and infrequently traded assets,

such as syndicated loans. Without more—and the complaint alleges no more—the asserted

claim fails to transform the abstract idea of “monitoring and transacting in securities not traded

on a conventional exchange” into a “particular, practical application of that abstract idea.”

Bascom Global Internet Servs., Inc. v. AT&T Mobility, LLC, 827 F.3d at 1352.

GPE’s infringement claim therefore fails as to Claim 1 of the ’444 patent. And because

that claim is properly treated as representative of the other asserted claims, the Court will grant

the motion to dismiss for failure to state a claim as to all three counts.

IV. Conclusion

For the foregoing reasons, defendant’s motion to dismiss is GRANTED.

So Ordered.

/s/ F. Dennis Saylor IV

F. Dennis Saylor IV

Dated: April 28, 2025 Chief Judge, United States District Court