United States Court of Appeals
`for the Federal Circuit
`______________________
`
`INTELLECTUAL VENTURES I LLC,
`INTELLECTUAL VENTURES II LLC,
`Plaintiffs-Appellants
`
`v.
`
`ERIE INDEMNITY COMPANY, ERIE INSURANCE
`EXCHANGE, ERIE INSURANCE PROPERTY &
`CASUALTY COMPANY, ERIE INSURANCE
`COMPANY, FLAGSHIP CITY INSURANCE
`COMPANY, ERIE FAMILY LIFE INSURANCE
`COMPANY, OLD REPUBLIC GENERAL
`INSURANCE GROUP, INC., OLD REPUBLIC
`INSURANCE COMPANY, OLD REPUBLIC TITLE
`INSURANCE GROUP, INC., OLD REPUBLIC
`NATIONAL TITLE INSURANCE COMPANY,
`Defendants-Appellees
`______________________
`
`2016-1128, 2016-1132
`______________________
`
`Appeals from the United States District Court for the
`Western District of Pennsylvania in Nos. 1:14-cv-00220-
`MRH, 2:14-cv-01130-MRH, Judge Mark R. Hornak.
`______________________
`
`Decided: March 7, 2017
`______________________
`
`
`
`Page 1
`
`HTC EX. 1031
`HTC v. Ancora
`US Patent No. 6,411,941
`
`

`

`
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` 2
`
`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
`
`CHRISTIAN JOHN HURT, Nix Patterson & Roach LLP,
`Dallas, TX, argued for plaintiffs-appellants. Also repre-
`sented by DEREK TOD GILLILAND, Daingerfield, TX.
`
`GREGORY H. LANTIER, Wilmer Cutler Pickering Hale
`and Dorr LLP, Washington, DC, argued for defendants-
`appellees Erie Indemnity Company, Erie Insurance
`Exchange, Erie Insurance Property & Casualty Company,
`Erie Insurance Company, Flagship City Insurance Com-
`pany, Erie Family Life Insurance Company. Also repre-
`sented by RICHARD ANTHONY CRUDO, JAMES QUARLES, III;
`MONICA GREWAL, Boston, MA; DAVID CHARLES MARCUS,
`Los Angeles, CA.
`
`VERNON M. WINTERS, Sidley Austin LLP, San Fran-
`cisco, CA, argued for defendants-appellees Old Republic
`General Insurance Group, Inc., Old Republic Insurance
`Company, Old Republic Title Insurance Group, Inc., Old
`Republic National Title Insurance Company. Also repre-
`sented by ALEXANDER DAVID BAXTER; ERIK JOHN CARLSON,
`Los Angeles, CA; RUSSELL E. CASS, Chicago, IL.
`______________________
`
`
`
`Before PROST, Chief Judge, WALLACH and CHEN, Circuit
`Judges.
`
`PROST, Chief Judge.
`Intellectual Ventures I LLC and Intellectual Ventures
`II LLC (collectively, “IV”) appeal from a final decision of
`the United States District Court for the Western District
`of Pennsylvania finding all claims of U.S. Patent No.
`6,510,434 (“’434 patent”), U.S. Patent No. 6,519,581 (“’581
`patent”), and U.S. Patent No. 6,546,002 (“’002 patent”)
`ineligible under 35 U.S.C. § 101, and dismissing IV’s
`infringement claims of the ’581 patent for lack of stand-
`ing. For the reasons discussed below, we affirm-in-part,
`vacate-in-part, and remand-in-part.
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`3
`
`I
`IV sued Erie Indemnity Company, Erie Insurance Ex-
`change; Erie Insurance Property & Casualty Company;
`Erie Insurance Company; Flagship City Insurance Com-
`pany; Erie Family Life Insurance Company (collectively,
`“Erie”); Old Republic General Insurance Group, Inc.; Old
`Republic Insurance Company; Old Republic Title Insur-
`ance Group, Inc.; Old Republic National Title Insurance
`Company; Highmark, Inc.; Hm Insurance Group, Inc.; Hm
`Life Insurance Company; Highmark Casualty Insurance
`Company; and Hm Casualty Insurance Company (collec-
`tively, “Appellees”), alleging infringement of the ’581
`patent, the ’434 patent, and the ’002 patent (collectively,
`“patents-in-suit”) in the United States District Court for
`the Western District of Pennsylvania. In response, Appel-
`lees moved to dismiss IV’s ’581 patent infringement
`claims under Rule 12(b)(1) for lack of standing. Appellees
`also moved under Rule 12(b)(6), arguing that the claims of
`the ’581, ’434, and ’002 patents are directed to ineligible
`subject matter under 35 U.S.C § 101.
`After concluding that IV did not own the rights to the
`’581 patent, the district court granted Appellees’ motion
`under 12(b)(1) for lack of standing. In reaching this
`conclusion, the district court found that a particular
`assignor did not assign any rights in or to the then-
`pending application to the ’581 patent, thus breaking a
`chain in ownership of the patent. J.A. 24. Moreover, the
`district court dismissed IV’s infringement claims under
`Rule 12(b)(6), finding that all claims of the three patents-
`in-suit were ineligible under § 101. J.A. 77. In its appeal,
`IV argues that the district court erred in dismissing its
`claims under Rule 12(b)(1) and 12(b)(6). We have juris-
`diction under 28 U.S.C. § 1295(a)(1).
`II
`On appeal, IV raises a number of issues regarding the
`proceedings below: (1) IV appeals the district court’s
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`dismissal of its infringement claims of the ’581 patent for
`lack of standing and its determination that the ’581
`patent is directed to ineligible subject matter under § 101;
`(2) IV appeals the district court’s determination that the
`’434 patent is directed to ineligible subject matter under
`§ 101; and (3) IV appeals the district court’s determina-
`tion that the ’002 patent is directed to ineligible subject
`matter under § 101. We take each issue in turn.
`A
`1
`First, we consider the district court’s dismissal of IV’s
`infringement claims under Rule 12(b)(1) as they relate to
`the ’581 patent. Our review of the district court’s dismis-
`sal for lack of standing under 12(b)(1) is de novo. Abbott
`Point of Care Inc. v. Epocal, Inc., 666 F.3d 1299, 1302
`(Fed. Cir. 2012). We apply state law to contractual dis-
`putes and interpretations of the parties’ patent assign-
`ment agreements.1 Semitool, Inc. v. Dynamic Micro Sys.
`
`
`1 We note that there are certain instances where
`Federal Circuit law is intimately bound up in the contract
`interpretation issue. For example, we have held that
`“[t]he question of whether or not an agreement provides
`for automatic assignment is a matter of federal [patent]
`law.” SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d
`1319, 1326 (Fed. Cir. 2010). “Although state law governs
`the interpretation of contracts generally . . . the question
`of whether a patent assignment clause creates an auto-
`matic assignment or merely an obligation to assign is
`intimately bound up with the question of standing in
`patent cases. We have accordingly treated it as a matter
`of federal law.” Abraxis Bioscience, Inc. v. Navinta LLC,
`625 F.3d 1359, 1364 (Fed. Cir. 2010) (quoting DDB Techs.,
`L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290
`(Fed. Cir. 2008); see Speedplay, Inc. v. Bebop, Inc., 211
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`5
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`Semiconductor Equip. GmbH, 444 F.3d 1337, 1341 (Fed.
`Cir. 2006). For this particular dispute, California law
`applies. See Erie Resp. Br. 6 (noting that the parties
`executed the agreement underlying this matter in Cali-
`fornia); Appellants’ Br. 18 (recognizing party agreement
`that California law governs). Because contract interpre-
`tation is a legal determination, the parties’ contract
`dispute is reviewed without deference on appeal. Semi-
`tool, 444 F.3d at 1341.
`The ’581 patent issued from a continuation patent ap-
`plication of U.S. Patent No. 6,236,983 (“’983 patent”).2
`After a series of assignments, the rights to the ’581 patent
`(then, a pending application) and the ’983 patent were
`assigned to AllAdvantage.com. J.A. 837–54. This as-
`signment agreement expressly assigned the ’983 patent
`and any continuation of that patent to AllAdvantage.com.
`The parties do not dispute that this assignment covered
`the then-pending application to the ’581 patent and that
`AllAdvantage.com owned both that application and its
`parent (the ’983 patent) upon execution of this agreement.
`See, e.g., Erie Resp. Br. 5–6. Less than six months later,
`
`
`F.3d 1245, 1253 (Fed. Cir. 2000) (stating that while the
`ownership of patent rights is typically a question exclu-
`sively for state courts, the question of whether contractual
`language effects a present assignment of patent rights, or
`an agreement to assign rights in the future, is resolved by
`Federal Circuit law). As explained below, however, IV
`has not persuaded us that this case implicates such
`exceptions and indeed, admitted that California law
`governs the contract interpretation inquiry. Accordingly,
`we analyze the contract interpretation issue under Cali-
`fornia law.
`2 Because we do not reach the issue of patent-
`eligibility of the ’581 patent, we did not include a sum-
`mary of the technology of the patent in this opinion.
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`AllAdvantage.com assigned various patents (including the
`’983 patent) and certain pending applications to Alset.
`J.A. 805–06 (“the Alset Agreement”). Although this
`agreement expressly identified the various patents and
`pending applications subject to assignment—including
`the ’983 patent and several of its pending foreign patent
`application counterparts—it did not explicitly list the ’581
`patent’s then-pending application. Id.
`In addition to its express identification and assign-
`ment of particular assets, this agreement included a more
`general grant clause: “Assignor, does hereby assign unto
`Assignee, all right, including common law rights, title and
`interest in the United States of America . . . in and to said
`patents together with the goodwill of the business symbol-
`ized by said patents and applications and registrations
`thereof.” J.A. 806. Approximately one year after the
`execution of this agreement, the U.S. Patent and Trade-
`mark Office (“PTO”) issued the ’581 patent. Several years
`later, Alset assigned the ’581 patent to an IV entity that
`later recorded that assignment with the PTO. J.A. 862–
`64. In light of this framework, the district court held that
`Alset did not convey title to the ’581 patent. J.A. 24. We
`conclude that the Alset Agreement did not include an
`assignment of rights to the ’581 patent and therefore
`affirm the district court’s Rule 12(b)(1) dismissal on that
`ground.
`Under Title 35, only patentees and their successors in
`title to a patent may bring an action for infringement. 35
`U.S.C. §§ 261, 281. IV argues that although the Alset
`Agreement did not expressly identify the ’581 patent’s
`then-pending application, the agreement transferred title
`because the parties intended for the assignment to cover
`this asset. To demonstrate intent, IV identifies two
`portions of the agreement’s general grant clause it be-
`lieves support its positon (reproduced below with empha-
`sis added to the two areas of IV’s focus): “Assignor, does
`hereby assign unto Assignee, all right, including common
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`7
`
`law rights, title and interest in the United States of
`America . . . in and to said patents together with the
`goodwill of the business symbolized by said patents and
`applications and registrations thereof.” J.A. 806. Specifi-
`cally, IV argues that the “in and to said patents” and
`“goodwill of the business symbolized by said patents”
`portions of this clause each—individually and inde-
`pendently—support its position. We disagree.
`Under California law, “[a] contract must be so inter-
`preted as to give effect to the mutual intention of the
`parties as it existed at the time of contracting, so far as
`the same is ascertainable and lawful.” Cal. Civ. Code
`§ 1636 (West 2016). “The language of a contract is to
`govern its interpretation, if the language is clear and
`explicit, and does not involve an absurdity.” Id. § 1638.
`When (as here) “a contract is reduced to writing, the
`intention of the parties is to be ascertained from the
`writing alone, if possible.” Id. § 1639. A court also may
`consider evidence extrinsic to a contract under certain
`circumstances. See, e.g., Wolf v. Superior Court, 8 Cal.
`Rptr. 3d 649, 656 (Cal. Ct. App. 2004) (citing the Califor-
`nia Supreme Court).
`At the outset, first we must determine whether and to
`what extent the parties’ extrinsic evidence affects the
`meaning of these two portions of this clause. “Where the
`meaning of the words used in a contract is disputed, the
`. . . court must provisionally receive any proffered extrin-
`sic evidence which is relevant to show whether the con-
`tract is reasonably susceptible of a particular meaning.”
`Id. at 655 (citation and internal quotation marks omitted)
`(citing the California Supreme Court). Thus, contract
`interpretation under California law is a two-step process.
`“First the court provisionally receives (without actually
`admitting) all credible evidence concerning the parties’
`intentions to determine ‘ambiguity,’ i.e., whether the
`language is ‘reasonably susceptible’ to the interpretation
`urged by a party.” Id. at 656 (citation omitted). “If in
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`light of the extrinsic evidence the court decides the lan-
`guage is ‘reasonably susceptible’ to the interpretation
`urged, the extrinsic evidence is then admitted to aid in
`the second step—interpreting the contract.” Id. (citation
`omitted).
`IV identifies extrinsic evidence that it contends
`shapes the meaning of the “in and to” and the “goodwill of
`the business symbolized” language and demonstrates that
`the parties originally intended to assign the ’581 patent.
`Specifically, IV observes that upon execution, Alset rec-
`orded the assignment at the PTO and represented in its
`terminal disclaimer that it owned all the rights to the ’581
`patent. Moreover, IV notes that Alset filed updated power
`of attorneys and paid the ’581 patent’s issuance fee.
`Upon provisional consideration of the extrinsic evi-
`dence IV proffered, we agree with the district court’s
`conclusion that there is no ambiguity within the Alset
`Agreement that could render it reasonably susceptible to
`IV’s interpretation. The assignment itself expressly listed
`the seventeen patents and applications that the parties
`intended to transfer, with clear language that conveyed
`the rights, “in and to,” and “goodwill of the business
`symbolized by,”
`those explicitly
`identified assets.
`J.A. 806. In the context of this agreement, IV’s proffered
`evidence neither resolves any ambiguity nor shapes the
`meaning of the words contained within the general grant
`clause. Although this evidence may lead one to reasona-
`bly conclude that Alset believed it owned the ’581 patent
`at some later point in time, it would be error for us to
`rewrite the parties’ agreement to include that which was
`plainly not included. Indeed,
`[i]f the plain language of the instrument is unam-
`biguous, a court may not “read into” the document
`additional terms in order to conform its meaning
`to what the court’s “intuition” tells it the parties
`must have intended. Rather, the court “is simply
`
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`9
`
`to ascertain and declare what is in terms or in
`substance contained therein, not to insert what
`has been omitted, or to omit what has been in-
`serted . . . .”
`PV Little Italy, LLC v. MetroWork Condo. Assn., 210 Cal.
`App. 4th 132, 135 (2012) (citing Cal. Civ. Proc. Code
`§ 1858 (West 2016)). Taken together, the Alset Agree-
`ment is not reasonably susceptible to IV’s proffered inter-
`pretation and, thus, we need not consider the extrinsic
`evidence advanced by IV.3 See Producers Dairy Delivery
`Co. v. Sentry Ins. Co., 718 P.2d 920, 925 (Cal. 1986)
`(explaining that a court should not consider extrinsic
`evidence “if the evidence offered would not persuade a
`reasonable man that the instrument meant anything
`other than the ordinary meaning of its words” (alterna-
`tions, citation, and internal quotation marks omitted)).
`Because we conclude that IV’s extrinsic evidence does not
`lend this clause reasonably susceptible to IV’s interpreta-
`tions, we move to IV’s two specific arguments applying a
`plain meaning interpretation to the contract. See Wolf,
`114 Cal. App. 4th at 1356.
`First, regarding “in and to said patents,” IV argues
`that the agreement automatically incorporated rights to
`
`3 Even if we considered the extrinsic evidence, we
`agree with the district court that the evidence “speaks to
`Alset’s belief in its ownership” of the ’581 patent and
`Alset’s actions holding “itself out as the owner of the ’581
`patent after executing the Alset Agreement,” but it says
`nothing about “AllAdvantage’s intent aside from its
`decision to do nothing to assert further ownership inter-
`est.” IV, 134 F. Supp. 3d at 894. Indeed, some of the
`extrinsic evidence demonstrates that, when the other
`parties in the chain-of-title wanted to assign continuation
`applications like the application leading to the ’581 pa-
`tent, they knew how to do so. See id.
`
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`the then-pending ’581 application because as a continua-
`tion, it is necessarily bound to the same inventive subject
`matter of its parent. IV predicates its argument on the
`patents’ familial relationship because the grant clause
`conveyed rights “in and to” the subject matter of the
`parent patent (not simply just title to it). We conclude
`that the “in and to said patents” language does not sup-
`port IV’s position. Patents, applications for patents, or
`any interest therein, must be assigned by an instrument
`in writing. 35 U.S.C. § 261. In assigning ownership
`rights here, the parties limited their written instrument
`to the seventeen patents and applications expressly listed
`in that agreement. J.A. 805–06 (including the ’983 pa-
`tent, but not the then-pending ’581 patent’s application).
`It does not mention either the application that led to the
`’581 patent or the ’581 patent itself, J.A. 805–06, a point
`that IV concedes, Appellants’ Br. 22. It does not disclose
`that continuation applications or other family members of
`the enumerated patents are assigned. J.A. 805–06. That
`several patent applications appear in the Alset Agree-
`ment suggests that, if AllAdvantage intended to convey
`the application leading to the ’581 patent to Alset, it knew
`how to do so.
`Turning to the broader language of the agreement, IV
`has not demonstrated that the rights “in and to” a partic-
`ular patent automatically include its child applications.
`Rather, IV seems to conflate the meaning of the word
`“patent,” as used in the agreement, with “invention”; the
`latter which we held conveyed rights to continuation
`applications. See DDB Techs., 517 F.3d at 1290. Thus,
`this language did not convey any rights, and a conclusion
`otherwise would directly conflict with the plain language
`of the agreement. For example, if the “in and to said
`patents” language automatically conveyed the rights to all
`applications within the family of those expressly identi-
`fied, the agreement need not list the ’983 patent’s foreign
`counterpart applications either. But as Erie correctly
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`observes, the agreement listed three of the ’983 patent’s
`foreign applications. J.A. 805; Erie Resp. Br. 31. The
`agreement did not, however, list the then-pending ’581
`patent application. J.A. 805–06. We thus conclude that
`the “in and to said patents” language did not convey any
`rights to the ’581 patent.
`Second, regarding the “goodwill of the business sym-
`bolized by said patents and applications” portion of the
`agreement, IV argues the goodwill assigned here includes
`the right to commercialize or license the patented inven-
`tion through the expiration of the ’983 patent as part of
`its patent monopoly. To support this contention, IV refers
`again to the terminal disclaimer Alset filed and cites Scott
`Paper Co. v. Marcalus Manufacturing Co., 326 U.S. 249
`(1945). IV relies on this case to support its position that
`the exclusion of the ’581 patent would necessarily devalue
`this goodwill if it were unable to commercialize the inven-
`tion without risk of infringing the ’581 patent. IV main-
`tains if legal title to the common inventive subject matter
`were severed, Alset could not receive the goodwill relating
`to the enjoyment of the patent monopoly in the ’983
`patent unless it received rights to the ’581 patent as well.
`Similar to the “in and to said patents” portion dis-
`cussed above, we conclude that the agreement’s “goodwill
`of the business symbolized by said patents and applica-
`tions” portion did not transfer title to the ’581 patent as
`well. IV largely predicates its arguments on the assump-
`tion that the agreement assigned the goodwill of the ’983
`patent itself. It did not. Rather, the plain language of the
`agreement assigned the “goodwill of the business symbol-
`ized by [the ’983 patent].” J.A. 806 (emphasis added). At
`best, this portion of the Alset Agreement assigned the
`goodwill of the resulting commercial exploitation of the
`patent. Indeed, IV’s citation to Scott Paper actually
`supports the conclusion that goodwill is something other
`than the patent instrument itself. In that case, the Su-
`preme Court referred to the goodwill in the context of “the
`
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`patented article or product.” Scott Paper, 326 U.S. at 256.
`In other words, goodwill here refers to the goodwill result-
`ing from the commercial exploitation of the products
`covered by the ’983 patent. But IV’s commercial exploita-
`tion of the ’983 patent bears no relevance to the ’581
`patent instrument itself. Because goodwill cannot sweep
`in patents not expressly listed in the parties’ agreement,
`this portion of the grant clause did not transfer any rights
`in the ’581 patent either.4
`Because we conclude that the Alset Agreement did not
`convey any rights to the ’581 patent, IV lacked standing to
`bring suit on that patent. Accordingly, we affirm the
`district court’s Rule 12(b)(1) dismissal for lack of stand-
`ing.
`
`2
`In addition to finding that IV lacked standing to as-
`sert infringement of the ’581 patent against Erie and Old
`Republic, the district court concluded that the ’581 patent
`is directed to an abstract idea and otherwise lacks an
`inventive concept, such that it is patent-ineligible under
`§ 101. See IV, 134 F. Supp. 3d at 909–17. We must
`vacate this aspect of the district court’s decision.
`Because IV lacks standing to assert infringement of
`the ’581 patent, we may not address that patent’s validity
`under § 101. When the party that filed suit is not the
`“patentee” under § 281 and otherwise fails to join the
`patentee to the suit, we dismiss all claims based on the
`subject patent. See, e.g., Diamond Coating Techs., LLC v.
`
`4 Because we do not subscribe to IV’s interpretation
`of the assignment, i.e., assigning goodwill to the patent
`instrument itself, we express no opinion as to whether the
`assignment of goodwill of a patent itself would have been
`effective in transferring the rights to the parent’s uniden-
`tified child application.
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`Hyundai Motor Am., 823 F.3d 615, 618–19 (Fed. Cir.
`2016). And when the patentee has not joined the action,
`we may not consider the merits of an affirmative defense
`directed to the patent in question, such as patent-
`eligibility under § 101. See, e.g., Bd. of Trs. of Leland
`Stanford Junior Univ. v. Roche Molecular Sys., Inc., 583
`F.3d 832, 848–49 (Fed. Cir. 2009) (“Stanford . . . lacks
`standing to assert its claims of infringement . . . . Thus,
`the district court lacked jurisdiction over Stanford’s
`infringement claim and should not have addressed the
`validity of the patents. . . . The district court’s grant of
`summary judgment of invalidity is therefore vacated, and
`the case is remanded with instructions to dismiss Stan-
`ford’s claim for lack of standing.” (citation omitted)).
`Without the patentee joining suit, courts may not make
`findings about the ’581 patent against which the patentee
`has had no opportunity to defend. We therefore vacate
`the district court’s summary judgment order of invalidity
`as to this patent and remand with instructions to dismiss
`all claims based on the ’581 patent.
`B
`Next, IV appeals the district court’s dismissal of its
`patent infringement claims relating to the ’434 patent for
`reciting ineligible subject matter under § 101.
`We review the district court’s dismissal under Rule
`12(b)(6) according to the law of the regional circuit.
`Content Extraction & Transmission LLC v. Wells Fargo
`Bank, Nat’l Assn., 776 F.3d 1343, 1346 (Fed. Cir. 2014).
`The Third Circuit applies a de novo standard of review to
`motions to dismiss under Rule 12. Sands v. McCormick,
`502 F.3d 263, 267 (3d Cir. 2007). Patent eligibility under
`§ 101 is an issue of law to which we review without defer-
`ence. OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
`1359, 1362 (Fed. Cir. 2015).
`Section 101 of the Patent Act defines patent-eligible
`subject matter: “Whoever invents or discovers any new
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`and useful process, machine, manufacture, or composition
`of matter, or any new and useful improvement thereof,
`may obtain a patent therefore, subject to the conditions
`and requirements of this title.” 35 U.S.C. § 101. In
`interpreting this statutory provision, the Supreme Court
`has held that its broad language is subject to an implicit
`exception for “laws of nature, natural phenomena, and
`abstract ideas,” which are not patentable. Alice Corp. v.
`CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014).
`To determine whether the exception applies, the Su-
`preme Court has set forth a two-step inquiry. Specifical-
`ly, a court must determine: (1) whether the claim is
`directed to a patent-ineligible concept, i.e., a law of na-
`ture, a natural phenomenon, or an abstract idea; and if so,
`(2) whether the elements of the claim, considered “both
`individually and ‘as an ordered combination,’” add enough
`to “‘transform the nature of the claim’ into a patent-
`eligible application.” Id. (quoting Mayo Collaborative
`Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1297–98
`(2012)). Applying this two-step process to claims chal-
`lenged under the abstract idea exception, we typically
`refer to step one as the “abstract idea” step and step two
`as the “inventive concept” step. Affinity Labs of Tex., LLC
`v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016).
`Under the “abstract idea” step we must evaluate “the
`‘focus of the claimed advance over the prior art’ to deter-
`mine if the claim’s ‘character as a whole’ is directed to
`excluded subject matter.” Id. (citation omitted). If the
`concept is directed to a patent-ineligible concept, we
`proceed to the “inventive concept” step. For that step we
`must “look with more specificity at what the claim ele-
`ments add, in order to determine ‘whether they identify
`an “inventive concept” in the application of the ineligible
`subject matter’ to which the claim is directed.” Id. at
`1258 (quoting Elec. Power Grp. v. Alstom S.A., 830 F.3d
`1350, 1353 (Fed. Cir. 2016)).
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`Turning to the invention, the ’434 patent contains
`twenty-eight claims relating to methods and apparatuses
`that use an index to locate desired information in a com-
`puter database. According to the patent, prior art data-
`base searching methods were
`inefficient and often
`returned many false positives. ’434 patent col. 1 ll. 40–44.
`The patent explains that a prior art database search for
`records containing the term “Ford,” for example, may
`return hits related to the Ford Company, Ford Theatre
`and the Ford brand of trucks. Thus, a searcher interested
`only in information related to Ford trucks would need to
`sift through a potentially large number of false hits to
`locate the desired information.
`The ’434 patent proposes to search the database using
`an index, which “is essentially a guide to the records of
`the database.” Id. at col. 2 ll. 39–41. According to the
`’434 patent, every record in the database is associated
`with one or more descriptive terms. For example, a
`database record for a restaurant that serves Chinese food,
`accepts AMERICAN EXPRESS and offers valet parking
`could be associated with
`the
`terms
`“Chinese,”
`“AMERICAN EXPRESS,” and “valet parking.” Id. at col.
`7 ll. 46–55. The database index in turn organizes this
`information using a series of “tags,” notably category tags
`and domain tags. The “category” tags comprise a group-
`ing of similar terms. For example, a “Cuisine” category
`tag could include the terms “Chinese,” “Mexican,” and
`“American.” And the “domain” tags describe a grouping of
`similar categories. A “Restaurant” domain tag could
`include categories such as the “Cuisine” category, as well
`as other categories relevant to Restaurants, such as
`“Payment Option” and “Amenities.” Each record in the
`database includes an index component that identifies the
`category and domain tags associated with that record. In
`the preferred embodiment, each tag is written in the well-
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`INTELLECTUAL VENTURES I LLC V. ERIE INDEMNITY CO.
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`known eXtensible Markup Language (XML).5 Id. at col. 9
`ll. 14–17. Each tag also has an associated metafile that
`provides additional information about the tag, such as its
`relationship to other tags and its place in the index’s
`hierarchical structure.
`When the system receives a search request, a set of
`tags that corresponds to the request is somehow identified
`by the system. And the system uses that set of tags to
`search for records that have an index component identify-
`ing the same set of tags. In other words, if the user
`looking for a restaurant searches for “American with valet
`parking,” the claimed system would identify and return
`database records having both “Cuisine” and “Amenities”
`tags in their associated index component. If those tags
`have associated metafiles, the system may utilize the
`available metadata to help refine the search. The system
`may, for example, determine that the term “American” is
`also associated with other category tags, such as “Brand,”
`“Language,” and the like. The system may then attempt
`to resolve the ambiguity by querying the user to choose
`cuisine or brand before returning the database records.
`IV identifies independent claims 1 and 19 as exempla-
`ry methods of creating and searching a database, respec-
`tively. Claim 1 provides:
`1. A method for creating a database and an index
`to search the database, comprising the steps of:
`creating the index by defining a plurality of XML
`tags including domain tags and category tags;
`
`
`5 We provide a more detailed summary of XML in
`our opinion in the companion appeal. Intellectual Ven-
`tures I LLC v. Capital One Financial Corp., Nos. 2016-
`1077, slip op. at 10–11 (Fed. Cir. March 7, 2017).
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`creating a first metafile that corresponds to a first
`domain tag;
`and creating the database by providing a plurality
`of records, each record having an XML index com-
`ponent.
`Id. at col. 15 ll. 38–45. Claim 19 provides:
`19. A method for searching a database of infor-
`mation, comprising the steps of:
`receiving a request for information from a client,
`the request having a first term;
`identifying a first XML tag that is associated with
`the first term;
`determining whether a first metafile corresponds
`to the first XML tag;
`if the first metafile corresponds to the first XML
`tag, then transmitting the first XML tag, the first
`metafile and query code to the client;
`once the client conducts a query by executing the
`query code using the first XML tag and the first
`metafile, then receiving query results including a
`first set of XML tags from the client;
`combining the first set of XML tags into a key;
`using the key to search the database to locate rec-
`ords including the first set of XML tags; and de-
`livering the records.
`Id. at col. 17 ll. 43–63. Thus, IV contends “[t]he heart of
`the ’434 patent is improved computer database search
`technology that utilizes an index constru[ct]ed of tags and
`metadata to facilitate searches.” Appellants’ Br. 46–47.
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`INTELLECTUAL VENTURES I LLC V. ER