Fast 101 Pty Ltd. v. Citigroup Inc., Citibank, N.a.

NOTE: This disposition is nonprecedential.

United States Court of Appeals
for the Federal Circuit
______________________

FAST 101 PTY LTD.,
Plaintiff-Appellant

v.

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

2020-1458
______________________

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

Decided: November 25, 2020
______________________

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

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

Before N
EWMAN, LOURIE, and CHEN, Circuit Judges.
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FAST 101 PTY LTD. v. CITIGROUP INC.
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CHEN, Circuit Judge.
Fast 101 Pty Ltd. (Fast 101) appeals from a decision of
the United States District Court for the District of Dela-
ware dismissing its complaint for failure to state a claim
and denying its motion for leave to take targeted discovery
and amend its complaint. The district court found that all
claims of the asserted patents recite patent-ineligible sub-
ject matter under 35 U.S.C. § 101. We affirm.
B
ACKGROUND
Fast 101 brought suit against CitiGroup Inc. and Citi-
bank, N.A. (collectively, Citi) alleging infringement of all
claims of five of its patents: U.S. Patent Nos. 8,515,867
(’867 patent), 8,660,947 (’947 patent), 8,762,273 (’273 pa-
tent), 9,811,817 (’817 patent), and 10,115,098 (’098 patent)
(collectively, the asserted patents). The asserted patents
share a common written description and all relate “gener-
ally to data processing systems, and more particularly, to
electronic trading and settlement systems,” ’867 patent col.
1 ll. 19–21. The asserted patents describe “an invoiceless
trading system that creates incentives for customers to pay
suppliers within a predetermined period of time, such as a
settlement period.” Id. at abstract. This system “enables
a customer to obtain a discount on orders placed with sup-
pliers in return for an immediate payment.” Id. Claim 1
of the ’867 patent is representative of all 234 asserted
claims:
1. A system configured for electronic settlement of
an order placed by a customer with a supplier com-
prising:
one or more bank servers, at least one of the one or
more bank servers receives a message related to
the order, the message comprising at least an order
amount;
a database associated with at least one of the one
or more bank servers that stores the order amount;
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FAST 101 PTY LTD. v. CITIGROUP INC.
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one or more processors associated with at least one
of the one or more bank servers that determines an
incentive amount, wherein the incentive amount is
determined based at least in part on one or more
fiscal attributes of the customer and the order
amount; and
a payment gateway associated with at least one of
the one or more bank servers, the payment gate-
way electronically transfers to a supplier account
on a first date an early payment for the order, the
supplier account associated with the supplier,
wherein the early payment is less than the order
amount by at least the incentive amount, and the
payment gateway that electronically receives a cus-
tomer payment from a customer account on a sec-
ond date, the customer account associated with the
customer, wherein the customer payment is not
less than the early payment plus an interest
amount, wherein the interest amount is based at
least in part on a credit period, wherein the credit
period is an amount of time between the first date
and the second date.
Id. at claim 1; see also Fast 101 Pty Ltd. v. Citigroup Inc.,
424 F. Supp. 3d 385, 387–88 (D. Del. 2020) (finding claim 1
representative); Berkheimer v. HP Inc., 881 F.3d 1360,
1365 (Fed. Cir. 2018) (“Courts may treat a claim as repre-
sentative . . . if the patentee does not present any meaning-
ful argument for the distinctive significance of any claim
limitations not found in the representative claim.”).
In response to Fast 101’s complaint, Citi filed a motion
to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state
a claim under which relief can be granted, arguing that all
the asserted claims recite patent-ineligible subject matter
under § 101. Fast 101 contended primarily in response
that the asserted claims are valid and sought leave for tar-
geted discovery and to amend its complaint. The district
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FAST 101 PTY LTD. v. CITIGROUP INC.
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court granted Citi’s motion to dismiss and denied Fast 101
leave to amend and conduct targeted discovery.
Applying the Supreme Court’s § 101 two-step inquiry
from Alice Corp. Pty. Ltd. v. CLS Bank International, 573
U.S. 208, 217–18 (2014), the district court reasoned that
the asserted claims are directed to the abstract idea of “an
intermediated settlement system” with “a discount for
early payment.” Fast 101, 424 F. Supp. 3d at 390. The
district court then concluded that “[n]one of the claimed el-
ements, taken individually or as an ordered combination,
provide the required inventive concept ‘sufficient to ensure
that the patent in practice amounts to significantly more
than a patent upon the ineligible concept itself.’” Id. at 392
(citing Alice, 573 U.S. at 218). In denying Fast 101’s motion
for leave, the district court explained that leave would “be
futile.” Id. at 393. Fast 101 timely appealed. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
D
ISCUSSION
We apply the law of the regional circuit when reviewing
a district court’s disposition of a motion to dismiss for fail-
ure to state a claim. FairWarning IP, LLC v. Iatric Sys.,
Inc., 839 F.3d 1089, 1092 (Fed. Cir. 2016). The Third Cir-
cuit “review[s] de novo a district court’s grant of a motion
to dismiss for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6).” Ballentine v. United States, 486
F.3d 806, 808 (3d Cir. 2007). We review de novo the deter-
mination that a claim is directed to patent-ineligible sub-
ject matter, Enfish, LLC v. Microsoft Corp., 822 F.3d 1327,
1334 (Fed. Cir. 2016), and under Third Circuit law, we re-
view “a district court’s denial of leave to amend [] for abuse
of discretion,” City of Cambridge Ret. Sys. v. Altisource As-
set Mgmt. Corp., 908 F.3d 872, 878 (3d Cir. 2018).
Section 101 allows inventors to obtain patents on “any
new and useful process, machine, manufacture, or compo-
sition of matter, or any new and useful improvement
thereof.” The Supreme Court, however, has held that
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FAST 101 PTY LTD. v. CITIGROUP INC.
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certain categories of subject matter, including abstract
ideas, are not eligible for patent protection under § 101.
Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566
U.S. 66, 70 (2012). “The abstract ideas category embodies
the longstanding rule that an idea of itself is not patenta-
ble.” Alice, 573 U.S. at 218 (internal brackets and quota-
tion marks omitted). To determine whether claimed
subject matter is patent eligible, we apply the two-step
framework enumerated in Alice. Id. We first “determine
whether the claims at issue are directed to a patent-ineli-
gible concept.” Id. If so, we “examine the elements of the
claim to determine whether it contains an inventive con-
cept sufficient to transform the claimed abstract idea into
a patent-eligible application.” Id. at 221 (internal quota-
tion marks omitted) (quoting Mayo, 566 U.S. at 72, 80). At
each step, the claims should be considered as a whole. See
id. at 218 n.3, 225.
A
Applying Alice step one, we agree with the district
court and Citi that the claims are directed to the abstract
idea of an intermediated settlement system that employs a
discount for early payment. As the district court explained,
“[L]ike Alice, these claims describe a method of exchanging
financial obligations between two parties by the use of a
third-party intermediary.” Fast 101, 424 F. Supp. 3d at
390. The asserted patents do, however, recite an element
not found in the claims in Alice—an “incentive amount.”
’867 patent at claim 1. But we agree with the district
court’s further finding that this incentive amount, or dis-
count, describes nothing more than the abstract idea of cal-
culating an amount based on fiscal attributes, see Fast 101,
424 F. Supp. 3d at 390, just as we concluded in Mortgage
Grader, Inc. v. First Choice Loan Services Inc., 811 F.3d
1314, 1324 (Fed. Cir. 2016) (determining that generating a
discounted loan price is an abstract idea). Fast 101 con-
tends that the claims are directed to “an improved method
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FAST 101 PTY LTD. v. CITIGROUP INC.
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of obtaining an early payment for the supplier based on
various attributes of the specific transaction using the
claimed system,” Appellant’s Br. at 11–12, such improve-
ments including “[i]ncreased cash flow” and “[c]ost reduc-
tion through automation and paper reduction,” id. at 15
(citation and internal quotation marks omitted). This ar-
gument fails to persuade; the so-called improvements re-
sulting from the claimed method are simply improvements
attendant to using electronic systems. Contrary to Fast
101’s contentions, these improvements do not demonstrate
that the “[p]atents-in-[s]uit are drawn to a particular im-
provement in the function of prior art technology, and thus
properly not considered drawn to an abstract idea.” Id. at
14 (citation, internal quotation marks, and brackets omit-
ted).
B
Under Alice step two, we conclude that the claims do
not recite any inventive concept to render them patent eli-
gible. Fast 101’s main argument on appeal is that the as-
serted patents recite “numerous technical improvements to
electronic trading systems,” id. at 19, including “special-
ized gateway technology,” id. We disagree. Just as the dis-
trict court concluded, the claims refer to nothing more than
well-understood, routine, and conventional technology
components. See Fast 101, 424 F. Supp. 3d at 392. The
claimed payment gateway cannot be construed as special-
ized in any sense. See id. at 391–92 and n.5 (explaining
that the ’867 patent’s written description demonstrates an
understanding that the gateway is nothing more than “con-
ventional commercially-available browsers and products”).
C
ONCLUSION
We have considered Fast 101’s remaining arguments
and are unconvinced. Further, Fast 101 has failed to pro-
vide any persuasive reason why the district court abused
its discretion in denying leave to take targeted discovery
and to amend because Fast 101 has not identified with
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specificity any additional factual allegations or claim con-
structions that would render amendment and discovery not
futile. We therefore affirm.
AFFIRMED
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