Case: 22-2218 Document: 43 Page: 1 Filed: 03/27/2024
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`NOTE: This disposition is nonprecedential.
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`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`MAX A. RADY,
`Plaintiff-Appellant
`
`v.
`
`THE BOSTON CONSULTING GROUP, INC., DE
`BEERS UK LTD.,
`Defendants-Appellees
`______________________
`
`2022-2218
`______________________
`
`Appeal from the United States District Court for the
`Southern District of New York in No. 1:20-cv-02285-ALC-
`BCM, Judge Andrew L. Carter.
`______________________
`
`Decided: March 27, 2024
`______________________
`
`STEVEN EDWARD TILLER, Whiteford, Taylor & Preston,
`LLP, Baltimore, MD, argued for plaintiff-appellant. Also
`represented by PETER JAMES DAVIS; KEVIN HROBLAK, Ice
`Miller LLP, Baltimore, MD.
`
` BRIAN ROBERT MATSUI, Morrison & Foerster LLP,
`Washington, DC, argued for all defendants-appellees. De-
`fendant-appellee Boston Consulting Group, Inc. also repre-
`sented by SHAUN PATRICK DELACY, KYLE W.K. MOONEY,
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`Case: 22-2218 Document: 43 Page: 2 Filed: 03/27/2024
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`2
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`New York, NY.
`
` CHRISTOPHER P. BORELLO, Venable LLP, New York,
`NY, for defendant-appellee De Beers UK Ltd. Also repre-
`sented by JOSHUA DANIEL CALABRO.
` ______________________
`
`Before REYNA, MAYER, and CUNNINGHAM, Circuit Judges.
`PER CURIAM.
`Max A. Rady appeals an order of the United States Dis-
`trict Court for the Southern District of New York dismiss-
`ing his patent infringement claim after concluding that his
`asserted patent claimed ineligible subject matter under 35
`U.S.C. § 101. For the reasons discussed below, we affirm.
`I. BACKGROUND
`Rady owns U.S. Patent No. 10,469,250 (the “’250 pa-
`tent”), which is directed to “a framework [for] record[ing] to
`a blockchain” the “unique identification[s] (signatures) of
`physical items which have unique, random properties.”
`’250 patent, Abstract. The claimed invention involves
`scanning a physical item, such as a gemstone, determining
`its unique pattern of imperfections, i.e., the item’s “signa-
`ture,” and then recording that signature to a blockchain if
`the physical object has not previously been registered. Id.
`col. 1 ll. 22–53. The patent purports to solve problems re-
`lated to asset provenance and asset and supply chain man-
`agement. Id. col. 3 l. 33–col. 5 l. 43. Claim 1 of the ’250
`patent recites:
`1. A network node comprising:
`one or more processing devices;
`a storage device, coupled to the one or more pro-
`cessing devices and storing instructions for execu-
`tion by at least some of the one or more processing
`devices;
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`Case: 22-2218 Document: 43 Page: 3 Filed: 03/27/2024
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`3
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`a communications subsystem, coupled to the one or
`more processing devices, to communicate with at
`least one or more other nodes of a peer-to-peer net-
`work; and
`item analysis components coupled to the one or
`more processing devices, the item analysis compo-
`nents comprising at least one imaging device con-
`figured to determine spectral analysis data and 3D
`scan data from measurements generated by the
`item analysis components;
`wherein the one or more processing devices operate
`to configure the network node to:
`analyze an instance of a physical item using the
`item analysis components to determine a unique
`signature for the instance, the unique signature de-
`termined using 3D spatial mapping to define the
`unique signature from the spectral analysis data
`and 3D scan data generated by the item analysis
`components for the physical item;
`determine, using the unique signature, whether
`the instance of the physical item is previously rec-
`orded to a blockchain maintained by the peer-to-
`peer network to provide item tracking and authen-
`tication services, comparing the unique signature
`generated by the network node to previously rec-
`orded unique signatures using 3D spatial analysis
`techniques, rotating in virtual space features of the
`physical item defined in the unique signature to de-
`termine a match with features defined in the pre-
`viously recorded unique signatures; and
`record the instance of the physical item to the
`blockchain in response to the determining whether
`the instance is previously recorded.
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`4
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`Id. col. 19 ll. 15–51.*
`In March 2020, Rady filed suit against The Boston Con-
`sulting Group, Inc. and De Beers UK Ltd. (collectively,
`“BCG”), alleging infringement of the ’250 patent. BCG
`thereafter filed a motion to dismiss Rady’s infringement
`claim pursuant to Federal Rule of Civil Procedure 12(b)(6).
`In its motion to dismiss, BCG asserted that “the claims of
`the ’250 patent are directed to the patent-ineligible ab-
`stract idea of collecting, processing, and storing data to
`track physical items” and they “do not improve anything
`about computer technology itself.” J.A. 196.
`In granting BCG’s motion, the district court stated that
`while Rady’s claimed system “record[s] a fingerprint for a
`gemstone” to a blockchain, the patent does “not improv[e]
`the functionality of storing and processing data on a block-
`chain.” J.A. 5. The court noted, moreover, that “a block-
`chain is merely a ledger maintained and verified through a
`peer-to-peer network, and [Rady] d[id] not describe how the
`patent improves blockchains.” J.A. 5–6. Furthermore, ac-
`cording to the court, “tracking physical objects do[es] not
`make [the] claims any less abstract.” J.A. 5.**
`Rady then filed a timely appeal with this court. We
`have jurisdiction under 28 U.S.C. § 1295(a)(1).
`
`
`* Because Rady has not adequately developed any el-
`igibility arguments about claims of the ’250 patent other
`than claim 1, we treat claim 1 as representative.
`
`In addition to patent infringement claims, Rady’s
`**
`Second Amended Complaint contained breach of contract
`and trade secret misappropriation claims. See J.A. 183–86.
`After the district court entered its order dismissing his in-
`fringement claims, Rady agreed to dismiss, with prejudice,
`his breach of contract and trade secret misappropriation
`claims. See J.A. 728–29.
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`II. DISCUSSION
`A. Standard of Review
`We apply regional circuit law when reviewing motions
`to dismiss
`for
`failure
`to
`state a
`claim un-
`der Rule 12(b)(6). Content Extraction & Transmission
`LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1346
`(Fed. Cir. 2014). “In the Second Circuit, grant of a motion
`to dismiss is reviewed de novo to determine whether the
`claim is plausible on its face, accepting the material factual
`allegations in the complaint and drawing all reasonable in-
`ferences in favor of the plaintiff.” Ottah v. Fiat Chrysler,
`884 F.3d 1135, 1141 (Fed. Cir. 2018) (first citing Ashcroft
`v. Iqbal, 556 U.S. 662, 678 (2009); and then citing Johnson
`v. Priceline.com, Inc., 711 F.3d 271, 275 (2d Cir. 2013)).
`B. Patent Eligibility
`Section 101 defines patent-eligible subject matter as
`“any new and useful process, machine, manufacture, or
`composition of matter, or any new and useful improvement
`thereof.” 35 U.S.C. § 101. It has been long recognized that
`this language excludes “[l]aws of nature, natural phenom-
`ena, and abstract ideas.” Ass’n for Molecular Pathology v.
`Myriad Genetics, Inc., 569 U.S. 576, 589 (2013) (“Myriad”)
`(quoting Mayo Collaborative Servs. v. Prometheus Lab’ys,
`Inc., 566 U.S. 66, 70 (2012)); see also Alice Corp. v. CLS
`Bank Int’l, 573 U.S. 208, 216 (2014).
`The Supreme Court has articulated a two-stage frame-
`work to determine whether a claim falls outside the scope
`of section 101. See Alice, 573 U.S. at 217–18. In the first
`stage, a court must determine whether the claim at issue
`is directed to a patent-ineligible concept, such as an ab-
`stract idea. Id. at 217. If so, the court, in the second stage,
`must assess whether the elements of the claim, considered
`both individually and as an ordered combination, are suffi-
`cient to “‘transform the nature of the claim’ into a patent-
`eligible application” of the concept. Id. (quoting Mayo, 566
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`U.S. at 78). This second stage of the eligibility analysis is
`often referred to as the “search for an ‘inventive concept’—
`i.e., an element or combination of elements that is ‘suffi-
`cient to ensure that the patent in practice amounts to sig-
`nificantly more than a patent upon the [ineligible concept]
`itself.’” Id. at 217–18 (alteration in original) (quoting
`Mayo, 566 U.S. at 72–73).
`C. Alice Step One
`The Alice step-one analysis requires us to consider the
`claims “in their entirety to ascertain whether their charac-
`ter as a whole is directed to excluded subject matter.” In-
`ternet Pats. Corp. v. Active Network, Inc., 790 F.3d 1343,
`1346 (Fed. Cir. 2015). “[W]hile the specification may help
`illuminate the true focus of a claim, when analyzing patent
`eligibility, reliance on the specification must always yield
`to the claim language in identifying that focus.” Charge-
`Point, Inc. v. SemaConnect, Inc., 920 F.3d 759, 766 (Fed.
`Cir. 2019).
`We agree with the district court that, at step one, the
`claims of the ’250 patent are directed to an abstract idea.
`See J.A. 5. Claim 1 requires identifying a physical item’s
`unique pattern of physical imperfections, or “signature,”
`and then recording that information to a blockchain if the
`object has not been previously registered. ’250 patent
`col. 19 ll. 15–51. As we have often emphasized, however,
`claims directed to gathering and storing data, without
`more, are impermissibly abstract. See, e.g., Int’l Bus.
`Machs. Corp. v. Zillow Grp., Inc., 50 F.4th 1371, 1378 (Fed.
`Cir. 2022) (explaining that this court has “repeatedly held
`claims directed to collection of information, comprehending
`the meaning of that collected information, and indication
`of the results, all on a generic computer network operating
`in its normal, expected manner to be abstract” (citation and
`internal quotation marks omitted)); In re Killian, 45 F.4th
`1373, 1382 (Fed. Cir. 2022) (explaining that because
`“[i]nformation as such is an intangible,” claims directed to
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`“gathering and analyzing information of a specified con-
`tent, then displaying the results without any particular as-
`sertedly
`inventive technology
`for performing those
`functions is an abstract idea” (alteration in original) (cita-
`tion and internal quotation marks omitted)).
`We note, moreover, that identifying items by their
`unique physical features is a long-standing and well-estab-
`lished practice. See, e.g., Bilski v. Kappos, 561 U.S. 593,
`611 (2010) (concluding that claims covering “the basic con-
`cept of hedging, or protecting against risk” described “a
`fundamental economic practice long prevalent in our sys-
`tem of commerce and taught in any introductory finance
`class” and were therefore directed to “an unpatentable ab-
`stract idea” (citation and internal quotation marks omit-
`ted)); Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161, 1167
`(Fed. Cir. 2019) (concluding that claims reciting a method
`for electronically processing checks were patent ineligible
`and explaining that “[t]he desire to credit a merchant’s ac-
`count as soon as possible” was a “long-standing commercial
`practice”). As the specification of the ’250 patent acknowl-
`edges, it has been long understood that many physical ob-
`jects have unique “small-scale imperfections.” ’250 patent
`col. 5 l. 19. Diamonds, for example, have “carbon imperfec-
`tions/carbon flaws” that “are unique in 3D space in the di-
`amond’s shape and type.” Id. col. 3 ll. 55–56. Indeed,
`Rady’s specification incorporates by reference a jewelry
`website that explains that diamonds can be identified by
`their unique imperfections. Id. col. 3 ll. 56–59 (incorporat-
`ing by reference J.A. 268–70).
`The fact that Rady’s patent describes the use of special-
`ized hardware does not, standing alone, mean that his
`claims are not directed to an abstract idea. As we have
`previously recognized, “claims are not saved from abstrac-
`tion merely because they recite components more specific
`than a generic computer.” BSG Tech LLC v. BuySeasons,
`Inc., 899 F.3d 1281, 1286 (Fed. Cir. 2018); see also Univer-
`sal Secure Registry LLC v. Apple Inc., 10 F.4th 1342, 1352
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`(Fed. Cir. 2021) (concluding that claims were directed to an
`abstract idea notwithstanding the fact that they recited the
`use of a “biometric sensor”); In re TLI Commc’ns LLC Pat.
`Litig., 823 F.3d 607, 611 (Fed. Cir. 2016) (concluding that
`a claim was directed to an abstract idea notwithstanding
`the fact that it “require[d] concrete, tangible components
`such as a telephone unit and a server” because “the speci-
`fication ma[de] clear that the recited physical components
`merely provide[d] a generic environment in which to carry
`out the abstract idea of classifying and storing digital im-
`ages in an organized manner” (internal quotation marks
`omitted)); Content Extraction, 776 F.3d at 1347 (concluding
`that claims were directed to an abstract idea notwithstand-
`ing the fact that they required the use of a scanner).
`From an eligibility perspective, the principal shortcom-
`ing in Rady’s claims is that they “recite generic steps and
`results—as opposed to a specific solution to a technological
`problem,” Universal Secure Registry, 10 F.4th at 1355.
`Claim 1 of the ’250 patent recites, in broad terms, the use
`of “item analysis components” to gather “spectral analysis
`data and 3D scan data” about the unique imperfections
`present in physical objects. ’250 patent col. 19 ll. 23–28.
`Rady’s patent, however, does not purport to have invented
`any new measurement techniques or measurement devices
`to identify such imperfections. Instead, it relies upon ex-
`isting devices, such as a “[s]pectral imager,” “[l]aser projec-
`tor,” “laser receiver,” and “[x]enon light source,” to analyze
`these imperfections. Id. col. 8 ll. 32–47.
`Rather than providing any significant details regard-
`ing how these various item analysis components function
`to determine an object’s “unique signature,” id. col. 1 ll. 47–
`48, the specification simply incorporates by reference a
`prior publication which discloses “an end-to-end measure-
`ment system for capturing spectral data on 3D objects,”
`J.A. 220, and which explains how components such as spec-
`tral imagers, J.A. 221–23, laser scanning systems, J.A.
`225–26, and a xenon light source, J.A. 225–26, can be used
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`to analyze and identify various physical objects, including
`“minerals,” J.A. 226. See ’250 patent col. 8 ll. 32–47. Rady’s
`specification then goes on to explain that, in the claimed
`invention, spectral imagers, laser scanning systems, and
`light sources are used as “described in” this prior publica-
`tion. Id.; see also id. col. 4 ll. 38–50 (explaining that a dia-
`mond can be reoriented in virtual space using techniques
`similar to those described in a previously published arti-
`cle). In essence, Rady’s specification “underscores the . . .
`abstract nature of the idea embodied in [his] claims,” Affin-
`ity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253,
`1259 (Fed. Cir. 2016), because rather than purporting to
`disclose any technological improvement to the item analy-
`sis components, it confirms that such devices are used in
`the same manner as they have been used in the past.
`The specification makes clear, moreover, that the
`claimed invention relies on the conventional use of existing
`blockchain technology. It explains that existing “[b]lock-
`chain technologies implement distributed ledgers on peer-
`to-peer networks,” ’250 patent col. 1 ll. 6–7, and notes that
`“[b]lockchains provide a way to trace unique digital items
`without reliance on a third party,” id. col. 1 ll. 11–12. It
`further describes widely-used standard protocols for con-
`structing and operating blockchains. Id. col. 7 ll. 46–57 (de-
`scribing the existing “Blockchain Authentication and Trust
`Module (BATM) framework”). Rather than purporting to
`disclose any new type of blockchain or any improvement in
`blockchain functionality, the specification incorporates by
`reference papers describing conventional blockchain con-
`struction and performance. Id. col. 7 ll. 20–25, 46–57 (in-
`corporating by reference J.A. 272–82 and J.A. 386–91).
`The specification recognizes, moreover, that blockchain
`technology has previously been used in connection with the
`management of “physical assets.” Id. col. 3 ll. 36–37.
`On appeal, Rady asserts that “counterfeiting is a wide-
`spread economic problem that results in billions of dollars
`in lost revenue each year, exposing individuals and
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`corporations to heightened health, safety, and cybersecu-
`rity risks from fraudulent materials and defective parts.”
`Appellant’s Br. 10. He further states that “[a]n application
`to confirm the provenance of gemstones . . . allow[s] stones
`to be traced by their unique characteristics, allowing banks
`and lenders to identify any ‘double spending’ of stones.” Id.
`at 11. In his view, his “claimed invention is the first use
`case that pairs the use of a non-invasive, unique, non-re-
`producible identifier for the unique identification, authen-
`tication [and] self-provenance of individual physical items,
`with blockchain technology, thus enabling the supply chain
`management to reap the full benefits of blockchain technol-
`ogy and succeed in combating counterfeiting.” Id. at 35.
`Rady’s claimed system may be useful in preventing the
`counterfeiting of gemstones, but utility is not the measure
`of patent eligibility. See Myriad, 569 U.S. at 591 (explain-
`ing that “[g]roundbreaking, innovative, or even brilliant
`discovery does not by itself satisfy the § 101 inquiry”).
`Rady’s claims are directed to an abstract idea because they
`do not purport to solve any technological problem, but in-
`stead use existing imaging and blockchain technology in
`predictable ways to address the economic problem of coun-
`terfeit goods. In effect, Rady’s claims rely on existing tech-
`nological tools to gather and record data but disclose no
`purported improvement in the tools themselves. See Elec.
`Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed.
`Cir. 2016) (concluding that claims were directed to an ab-
`stract idea where their “focus” was not on “an improvement
`in computers as tools, but on certain independently ab-
`stract ideas that use computers as tools”); see also Trading
`Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1084, 1093 (Fed. Cir.
`2019) (concluding that claims were directed to an abstract
`idea because they did “not improve the functioning of the
`computer, make it operate more efficiently, or solve any
`technological problem”).
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`D. Alice Step Two
`Turning next to Alice step two, we conclude that Rady’s
`claims fail to recite any elements that, either individually
`or as an ordered combination, transform the abstract idea
`of gathering and storing data about the unique imperfec-
`tions of a physical object into a patent-eligible application
`of that idea. See Alice, 573 U.S. at 217. Rady argues that
`his “claims are directed to the inventive combination of
`multiple item analyses components to capture” the unique
`imperfections in physical objects. Appellant’s Br. 39. We
`do not find this argument persuasive. Rady’s patent does
`not meaningfully explain how the various “item analysis
`components,” ’250 patent col. 19 l. 23, are configured and
`combined, much less purport to combine those components
`in an inventive way. See TLI Commc’ns, 823 F.3d at 615
`(emphasizing that “vague, functional descriptions of . . .
`components are insufficient to transform [an] abstract idea
`into a patent-eligible invention”).
`Nor does Rady plausibly allege that recording infor-
`mation about the unique imperfections of a physical object
`on a blockchain, rather than another type of ledger, sup-
`plies an inventive concept. As discussed previously, Rady’s
`patent does not purport to disclose any novel type of block-
`chain or other decentralized network. It does not, moreo-
`ver, disclose any improved or otherwise unconventional
`technique for storing data on a blockchain. In this regard,
`the fact that the patent describes recording a particular
`type of information—data about the unique pattern of im-
`perfections in a physical object—to a blockchain does not
`mean that it improves the underlying blockchain technol-
`ogy. See BSG Tech, 899 F.3d at 1288 (explaining that “an
`improvement to the information stored by a database is not
`equivalent to an improvement in the database’s function-
`ality”). Thus, because the claims of the ’250 patent use con-
`ventional
`item analysis
`components and existing
`blockchain technology to implement the abstract idea of
`gathering and storing information about physical objects,
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`RADY v. BOSTON CONSULTING GROUP, INC.
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`they fail to supply the inventive concept required at Alice
`step two. See Trinity Info Media, LLC v. Covalent, Inc., 72
`F.4th 1355, 1367 (Fed. Cir. 2023) (explaining that this
`court has “found no inventive concept where claims merely
`recited ‘generic features’ or ‘routine functions’ to imple-
`ment the underlying abstract idea” (citations omitted)).
`E. Motion to Dismiss
`We reject, moreover, Rady’s contention that the district
`court prematurely resolved the eligibility question. “Like
`other legal questions based on underlying facts, [the eligi-
`bility] question may be, and frequently has been, resolved
`on a Rule 12(b)(6) or (c) motion where the undisputed facts,
`considered under the standards required by that Rule, re-
`quire a holding of ineligibility under the substantive stand-
`ards of law.” SAP Am., Inc. v. InvestPic, LLC, 898 F.3d
`1161, 1166 (Fed. Cir. 2018). In response to BCG’s Rule
`12(b)(6) motion, Rady asserted that his claimed invention
`passed muster under section 101 because it relied upon
`specialized sensors, J.A. 327–28, and “solv[ed] a compli-
`cated and long[-]standing problem plaguing many indus-
`tries,” J.A. 335. Because Rady failed to present non-
`conclusory allegations that his patent disclosed any specific
`technical improvements to computers, measurement de-
`vices, blockchains, or any other technology, however, the
`district court properly resolved the eligibility question at
`the pleadings stage. See, e.g., Simio, LLC v. FlexSim Soft-
`ware Prods., Inc., 983 F.3d 1353, 1365 (Fed Cir. 2020) (“We
`disregard conclusory statements when evaluating a com-
`plaint under Rule 12(b)(6).”). We have considered Rady’s
`remaining arguments but do not find them persuasive.
`III. CONCLUSION
`Accordingly, the order of the United States District
`Court for the Southern District of New York is affirmed.
`AFFIRMED
`
`