People.ai, Inc. v. SetSail Technologies, Inc.

Background

People.ai, Inc. brought two patent-infringement actions against SetSail Technologies, Inc. and Clari Inc. The SetSail action asserted U.S. Patent Nos. 10,496,634; 10,565,229; and 10,657,129. The Clari action asserted those same three patents plus U.S. Patent Nos. 10,503,783; 10,657,132; 10,872,106; and 10,922,345.

The asserted patents generally concerned business-analytics systems that process electronic activities, such as emails and phone calls, match them with profiles and business records, filter or organize the information, and calculate scores or forecasts concerning business opportunities. SetSail and Clari moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing that the asserted claims were not eligible for patent protection under 35 U.S.C. § 101. The court considered the motions together because the patents were closely related and the defendants’ arguments substantially overlapped.

Legal standard

Judgment on the pleadings is proper when the pleadings show that no material factual issue remains and the moving party is entitled to judgment as a matter of law. The court applies an analysis substantially similar to the analysis for a motion to dismiss for failure to state a claim. At this stage, the court accepts plausible factual allegations as true, but it does not accept conclusory allegations or unreasonable inferences. Patent eligibility may be decided from the pleadings when the allegations do not prevent resolving the issue as a matter of law.

Section 101 allows patents for new and useful processes, machines, manufactures, compositions of matter, and improvements, but excludes laws of nature, natural phenomena, and abstract ideas. Under the two-step test established by the Supreme Court, the court first asks whether the claims are directed to an abstract idea. If they are, the court asks whether the claim elements include an inventive concept that transforms the abstract idea into a patent-eligible invention. Generic computer hardware or software, and simply instructing a computer to apply an abstract idea, generally do not supply that inventive concept.

The court analyzed representative claims and then considered other claims that People.ai addressed. It treated claims as representative when the other claims were substantially similar, linked to the same abstract idea, and not meaningfully distinguished by People.ai.

The ’129, ’106, and ’229 patents

For the ’129 patent, representative claim 20 described maintaining profiles and business records, extracting data from electronic activities, matching an activity with profiles and records based on senders and recipients, and storing the resulting association. The court characterized this as collecting data, recognizing information within it, and storing the recognized information. It found that the claim reflected a common business practice that could be performed by a corporate salesperson and was directed to an abstract idea.

The court rejected People.ai’s argument that storing the associations separately from a customer-relationship-management system was a technical improvement. The court found that the claim did not require that separation, did not define the location or relationship of the processors, and did not prevent storage in the customer-relationship-management system itself. The court also ruled that, even if the separation theory appeared in the claim, it would amount to generic computer functionality rather than an inventive concept. The other asserted claims People.ai addressed—claims 1, 11, 19, and 23—were substantially similar. The asserted claims of the ’129 patent therefore were not patent eligible.

For the ’106 patent, People.ai acknowledged that representative claim 19 was substantially the same as claim 20 of the ’129 patent. The court therefore found claim 19, along with the other asserted claims it considered—claims 1, 14, and 20—not patent eligible for the reasons given in the ’129-patent analysis.

For the ’229 patent, representative claim 19 used filtering rules and separate candidate sets based on the sender and recipients of an electronic activity, then selected and stored an associated business record. The court found that this was another common business practice, comparable to discarding unwanted mail and filing relevant communications in the correct business file. It rejected People.ai’s arguments that additional rules or a team-related field made the claims patent eligible. The other asserted claims it considered—claims 6, 7, and 11—were substantially similar, and the asserted claims of the ’229 patent were not patent eligible.

The ’783 and ’345 patents

For the ’783 patent, representative claim 12 determined a match score between an electronic activity and candidate business records, then created a new record when the score did not meet a threshold. The court found that deciding whether to associate a communication with an existing record or create a new one was a longstanding human business practice. It also found that the claimed “match score” was described only in functional terms and operated as a black box for reaching the desired result, rather than specifying a technological method for calculating the score. The court rejected People.ai’s argument that the claim’s specificity supplied an inventive concept and found the asserted claims of the ’783 patent ineligible.

For the ’345 patent, representative claim 11 identified and parsed electronic activities, applied generic filtering policies, matched an activity to a business record, and sent instructions to store the association in the system of record. The court found the claim directed to the abstract idea of restricting data from further analysis using generic rules, comparable to discarding unwanted mail before updating business files. It rejected People.ai’s argument that reducing computing resources and noise in the customer-relationship-management system was a specific improvement in computer technology. The other claim People.ai addressed, claim 18, was substantially similar. The asserted claims of the ’345 patent were not patent eligible.

The ’634 and ’132 patents

For the ’634 patent, representative claim 10 calculated a completion score for a business opportunity using the timing of electronic activities and the role, title, or department of participants. The court found that assessing the likelihood that a deal would close based on who was involved and when communications occurred was an elementary business concept. It also found that the claim invoked a result without explaining how the score would be calculated. The court rejected People.ai’s arguments that faster computer calculations, real-time data, or separation from the system storing electronic activities supplied an inventive concept. The other claim it considered, claim 17, was substantially similar. The asserted claims of the ’634 patent were not patent eligible.

For the ’132 patent, representative claim 12 forecast whether a business process would be completed within a specified time using information from electronic activities, participant roles, and the stage of the process. The court found that making this kind of business prediction was a longstanding commercial practice. It concluded that the stage value and completion score were functional descriptions or generic computer operations, and that greater speed and efficiency did not provide an inventive concept. People.ai did not address additional claims of the ’132 patent. The asserted claims of the ’132 patent were not patent eligible.

Disposition

The court granted the motions for judgment on the pleadings. It ruled that the asserted claims of the ’129, ’106, ’229, ’783, ’345, ’634, and ’132 patents were invalid as patent-ineligible subject matter under Section 101. The order was signed by Judge William Alsup on December 13, 2021.