text:
    INTELLECTUAL VENTURES I LLC, Intellectual Ventures II LLC, Plaintiffs-Appellants v. CAPITAL ONE FINANCIAL CORPORATION, Capital One Bank (USA), National Association, Capital One, National Association, Defendants-Appellees
    2016-1077
    United States Court of Appeals, Federal Circuit.
    Decided: March 7, 2017

      Ian Neville Feinberg, Feinberg Day Alberti & Thompson LLP, Menlo Park, CA, argued for plaintiffs-appellants. Also represented by Marc Belloli, Elizabeth Day, Clayton W. Thompson, II; Eric F. Citron, Goldstein & Russell, P.C., Bethesda, MD.
    Matthew J. Moore, Latham & Watkins LLP, Washington, DC, argued for defendants-appellees. Also represented by Gabriel Bell, Adam Michael Greenfield; Jeffrey G. Homrig, Menlo Park, CA; Robert A. Angle, Dabney Jefferson Carr, IV, Troutman Sanders LLP, Richmond, VA; Kenneth R. Adamo, David William Higer, Kirkland & Ellis LLP, 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 District of Maryland finding all claims of U.S. Patent No. 7,984,081 (“’081 patent”) and U.S. Patent No. 6,546,002 (“’002 patent”) ineligible under 35 U.S.C. § 101 and barring IV from pursuing its infringement claims of U.S. Patent No. 6,715,084 (“’084 patent”) under a collateral estoppel (issue preclusion) theory. For the reasons discussed below, we affirm.

I

IV sued Capital One Financial Corporation, Capital One Bank (USA), National Association, Capital One, and National Association (collectively, “Capital One”), alleging infringement of the ’084 patent, the ’081 patent, and the ’002 patent (collectively, “patents-in-suit”) in the United States District Court for the District of Maryland. In response, Capital One asserted antitrust counterclaims against IV under the Sherman Act and moved for summary judgment on TV’s infringement claims, arguing that the ’081 and ’002 patents are invalid under 35 U.S.C. § 101.

In a related proceeding, the United States District Court for the Southern District of New York entered a partial summary judgment order of ineligibility under § 101 for the ’084 patent. See Intellectual Ventures II, LLC v. JP Morgan Chase & Co., No. 13-cv-3777-AKH, 2015 WL 1941331, at *17 (S.D.N.Y. Apr. 28, 2015) (“JPMC’); J.A. 1343-74. Relying on the JPMC court’s partial summary judgment order, Capital One moved for summary judgment in the District of Maryland under a collateral estoppel theory to bar IVs infringement action on those patents.

In response to Capital One’s summary judgment motions, the district court invalidated the ’081 and ’002 patents under § 101 and barred IV from proceeding on its infringement claims as to the ’084 patent under a collateral estoppel theory based on the JPMC court’s findings. Having granted Capital One’s summary judgment motion on collateral estoppel grounds, the District of Maryland elected not to independently reach the merits of the ’084 patent’s eligibility under § 101. After disposing of the patents-in-suit, and over IVs objection, the district court certified its judgment under Federal Rule of Civil Procedure 54(b) so that this appeal could proceed concurrently with Capital One’s antitrust counterclaims in the District of Maryland. IV filed its appeal. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

On appeal, IV raises a number of issues regarding the proceedings below: (1) IV argues that the district court abused its discretion by certifying this appeal under Rule 54; (2) IV appeals the district court’s determination that it is collaterally es-topped from pursuing its patent infiringement claims as to the ’084 patent; and (3) IV appeals the district court’s determination that the ’081 and ’002 patents are invalid under § 101. We take each issue in turn.

A

We review the district court’s decision to certify a partial final judgment under Rule 54(b) for an abuse of discretion. See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76 S.Ct. 895, 100 L.Ed. 1297 (1956). On appeal, IV argues that the district court erred by merely providing a two-sentence Rule 54(b) certification statement without any specific findings or reasoning to support its conclusion. IV also asserts that because the district court did not make any findings or provide a rationale, any deference we owe to the district court “is nullified” under Braswell Shipyards, Inc. v. Beazer E., Inc., 2 F.3d 1331, 1335-36 (4th Cir. 1993). Asidé from attacking the sufficiency of the district court’s reasoning, IV argues that the close interrelationship between its infringement claims and Capital One’s antitrust counterclaims weighs against certification. IV therefore maintains that we should vacate the certification and remand the appeal.

Capital One responds that the district court’s express finding of “ño just reason for delay” supports its decision to certify. It also cites the district court’s additional certification reasoning in response to IV’s motion to vacate the Rule 54(b) judgment. See J.A. 1728 (explaining why Rule 54(b) certification would create a more efficient use of judicial resources under this case’s facts and procedural posture). Regarding its counterclaims, Capital One argues that the antitrust issues are not sufficiently interrelated to IV’s infringement claims because its counterclaims implicate TV’s patent portfolio, which encompasses roughly 3,500 patents.

We agree with Capital One that the district court did not abuse its discretion in certifying the appeal under Rule 54(b). Under that rule, “[w]hen an action presents more than one claim for relief ... the court may direct entry of final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” Fed. R. Civ. P. 54(b).

First, regarding the sufficiency of the district court’s findings, we observe that the district court set forth its reasoning for certification in two separate, independent orders. See J.A. 55 (concluding that “there is no just reason for delaying]” entry of judgment with the antitrust claims still pending in the initial motion); J.A. 1727-28 (weighing the potential benefits of reserving final judgment under a Rule 60 motion and concluding that judicial economy supports certification). Although the district court’s initial ruling did not set forth a lengthy analysis in support of certification, it expressly determined that there was no just reason for delay. J.A. 55. Beyond this, the district court subsequently explained why judicial economy supports its initial determination. J.A. 1728. Regarding the sufficiency of its analysis, therefore, we conclude that the district court did not abuse its discretion because it met the standard set forth by the rule.

Second, we review the extent to which the existence of Capital One’s counterclaims affect, the analysis. To do so, we may consider — among other factors — “the relationship between the adjudicated and unadjudicated claims.” Braswell Shipyards, 2 F.3d at 1335-36. Here, Capital One’s antitrust counterclaims implicate IV’s patent portfolio of roughly 3,500 patents. J.A. 3026-27. Yet IV asserts only a narrow subset (the patents-in-suit) of that broader portfolio. Id. Further, the scope of Capital One’s antitrust counterclaims transcends issues of mere infringement. See id. (alleging, among other things, wrongful conduct, concealing the scope of its portfolio, and demanding excessive licensing rates). Indeed, the mere existence of some factual overlap between the parties’ claims and counterclaims does not necessarily lead to the conclusion that the district court abused its discretion. See, e.g., W.L. Gore & Assocs. v. Int’l Med. Prosthetics Research Assocs., 975 F.2d 858, 864 (Fed. Cir. 1992) (recognizing that the factual overlap on one aspect of a counterclaim is not adequate to show an abuse of discretion). Under these facts, we conclude that the district court did not abuse its discretion given the tenuous relationship between the claims on appeal and counterclaims that remain. We have considered IV’s remaining arguments, but find them unpersuasive. As a result, we- affirm the district court and entertain the remaining issues on appeal.

B

We review issues of preclusion de novo, applying the law of the regional circuit. Aspex Eyewear, Inc. v. Zenni Optical Inc., 713 F.3d 1377, 1380 (Fed. Cir. 2013). Similarly, we review a district court’s summary judgment ruling under the law of the regional circuit, DDR Holdings, LLC V. Hotels.com, L.P., 773 F.3d 1245, 1252 (Fed. Cir. 2014). The Fourth Circuit reviews the entry of summary judgment de novo. Sylvia Dev. Corp. v. Calvert Cnty. Md., 48 F.3d 810, 817 (4th Cir. 1995). The Fourth Circuit has estab lished five requirements for collateral es-toppel. See Ramsay v. U.S. Immigration & Naturalization Serv., 14 F.3d 206, 210 (4th Cir. 1994) (requiring that the issue in the prior proceeding be identical, actually determined, necessary, final, and that the affected party was afforded a full and fair opportunity to litigate the issue). Here, the parties only dispute the finality requirement, for which the Fourth Circuit requires a “final and valid” judgment. In re Microsoft Corp. Antitrust Litig., 355 F.3d 322, 326 (4th Cir. 2004).

On appeal, IV challenges the district court’s grant of partial summary judgment in which' the court determined that IV was collaterally estopped from pursuing its patent infringement claims as to the ’084 patent. It argues that the district court erred because it based its collateral estop-pel findings on a partial summary judgment order by the JPMC court, rather than a final judgment. In support of its position, IV cites Vardon Golf Co. v. Karsten Manufacturing Corp., 294 F.3d 1330 (Fed. Cir. 2002). In that case — applying Seventh Circuit law — we held a partial summary judgment order does not meet the finality requirement of collateral estop-pel. See id. at 1333 (basing collateral es-toppel necessarily on a decision that is “immune ... to reversal or amendment”) (citation omitted).

We conclude that under Fourth Circuit law, collateral estoppel attaches in light of the JPMC court’s partial summary judgment order. At the outset, we observe that TV’s reliance on Vardon is misplaced because in that case, we applied the law of the. Seventh Circuit. See Vardon, 294 F.3d at 1333 (applying an “immune ... to reversal or amendment” standard for collateral estoppel to attach). The Fourth Circuit, however, applies a less rigid test of finality. See Swentek v. USAIR, Inc., 830 F.2d 552 (4th Cir. 1987) (abrogated on other grounds). Under Swentek, finality neither demands final judgment, nor requires a party’s appeal. Id. at 561. Rather, “[f]inality for purposes of collateral estop-pel is a flexible concept and ‘may mean little more than that the litigation of a particular issue has reached such a stage that a court sees no really good reason for permitting it to be litigated again.’ ” Id. (citation omitted). Indeed, “[a]s long as the prior adjudication of the identical issue is conclusive, [the court does not] require the issue to be tried again because it lacked the formality of an express order and a ‘no just reason for delay’ determination.” See id. (noting that a trial judge need not enter judgment under Rule 54 and await appeal before ascribing a preclusive effect) (citation omitted).

Applying the Fourth Circuit’s test, we conclude that the JPMC court’s partial summary judgment order met the finality prong for the purposes of collateral estop-pel. Here, the JPMC court granted Capital One’s partial summary judgment motion after considering the parties’ briefing and oral argument. 2015 WL 1941331, at *17. Indeed, in deciding JPMC, the United States District Court for the Southern District of New York “denied as moot” additional discovery motions related to the ’084 patent. Id. Although the district court has not yet entered its judgment on IV’s claims, it has nothing left to resolve absent a reversal and remand on appeal. Because this particular issue “has reached such a stage that [the district court would] see[ ] no really good reason for permitting it to be litigated again,’ ” the JPMC court’s order meets the finality requirement under Fourth Circuit precedent. Swentek, 830 F.2d at 561 (citation omitted). Thus, we conclude that collateral estoppel attaches as a result of the JPMC court’s partial summary judgment order invalidating the ’084 patent.

C

The Fourth Circuit reviews the grant or denial of summary judgment de novo. Sylvia Dev. Corp., 48 F.3d at 817. Patent eligibility under § 101 is an issue of law that we review without deference. 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 as follows: “Whoever invents or discovers any new 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, — U.S. -, 134 S.Ct. 2347, 2355, 189 L.Ed.2d 296 (2014).

To determine whether the exception applies, the Supreme Court has set forth a two-step inquiry. Specifically, a court must determine: (1) whether the claim is directed to a patent-ineligible concept, i.e., a law of nature, 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., 566 U.S. 66, 132 S.Ct. 1289, 1297-98, 182 L.Ed.2d 321 (2012)). Applying this two-step inquiry to claims challenged 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 evaluate “the ‘focus of the claimed advance over the prior art’ to determine if the claim’s ‘character as a whole’ is directed to excluded subject matter.” Id. If the claim is directed to a patent-ineligible concept, we proceed to the “inventive concept” step. For that step we “look with more specificity at what the claim elements 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)).

On appeal, IV challenges the district court’s determinations that the ’081 and ’002 patents fail under step one and step two of Alice under § 101.

The ’081 Patent

The ’081 patent consists of twenty-nine claims relating to methods, systems, and apparatuses for dynamically managing extensible Markup Language (“XML”) data. XML is a specialized mark-up computer language developed in the mid-1990s that defines a set of rules for encoding documents in both a human- and machine-readable format. J.A. 663-64. Given this unique encoding, XML documents have specific format requirements for the data contained in the document, and tags that define what data the system stores at each position within an XML document. See J.A. 895 (discussing the use of nested structures to preserve the relationship of data within a given XML document). The ’081 patent explains that companies frequently use XML documents to publish various types of information that customers and partners use, such as invoices, purchase orders, and price lists. Because XML users can create their own unique formats using these XML rules, not all formats are compatible. Therefore, companies attempting to share these types of XML documents may find them incompatible with their own XML formats. Resolving this conflict, the ’081 patent contends, was a difficult task that required specialized programming skills to manipulate and transfer XML documents into the desired format.

Thus, the ’081 patent identified what its inventor perceived as a need to “allow[] the user to view and update XML documents in different formats, and allow[ ] the user to manipulate the data and perform actions without programming skills.” ’081 patent col. 1 ll. 45-48. To fulfill this need, the patent describes presenting the user with a second document — the “dynamic document” — which is based upon data extracted from the original XML document. According to the patent, the user can then make changes to the data displayed in the dynamic document and the changes will be dynamically propagated back into the original XML document (despite the acknowledged compatibility problems with such documents). Viewed within this framework, we turn to the specific language of the claims. For convenience, we reproduce claim 21 below.

21. An apparatus for manipulating XML documents, comprising:
a processor;
a component that organizes data components of one or more XML documents into data objects;
a component that identifies a plurality of primary record types for the XML documents;
a component that maps the data components of each data object to one of the plurality of primary record types;
a component that organizes the instances of the plurality of primary record types into a hierarchy to form a management record type;
a component that defines a dynamic document for display of an instance of a management record type through a user interface; and
a component that detects modification of the data in the dynamic document via the user interface, and in response thereto modifies a data component in an XML document.

’081 patent col. 20 ll. 43-61.

In short, the ’081 patent concerns a system and method for editing XML documents. Stripped of excess verbiage, the claim creates the dynamic document based upon “management record types” (“MRTs”) and “primary’ record types” (“PRTs”). The inventor coined these terms to describe the organizational structure of the data at issue. A PRT is a simple data structure that contains unspecified data extracted from XML documents and an MRT is merely a collection of PRTs. ’081 patent col. 2 ll. 5-12. A user interface then displays the dynamic document to the user to permit the user to make modifications to the document. In response to these changes made to the dynamic document, the system somehow modifies the underlying XML document.

1

We find that, under step one, the claims of the ’081 patent are abstract. We conclude that the patent claims are, at their core, directed to the abstract idea of collecting, displaying, and manipulating data.

We have held other patent claims ineligible under § 101 for reciting similar data manipulation steps. For instance, in Content Extraction and Transmission LLC v. Wells Fargo Bank, National Ass’n, we held the concept of “1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory” abstract. 776 F.3d 1343, 1347 (Fed. Cir. 2014). In particular, the invention there involved extracting data from a document, entering the data into appropriate data fields, and storing the data in memory. Id. at 1345. In Intellectual Ventures I LLC v. Capital One Bank (USA), we concluded that customizing information and presenting it to users based on particular characteristics is abstract as well. 792 F.3d 1363, 1370 (Fed. Cir. 2015) (“Intellectual Ventures I”). And in Electric Power Group, we explained that an invention directed to collection, manipulation, and display of data was an abstract process. 830 F.3d at 1353-54 (Fed. Cir. 2016). Here, the ’081 patent’s concept related to the collection, display, and manipulation of data is similarly abstract.

According to IV, the ’081 patent provides a concrete solution to a problem in computer programming, i.e., how to “dynamically manage multiple sets of XML documents.” Appellants’ Br. 31 (citation omitted). IV maintains that because the invention relates to a specialized computer language — XML—and renders otherwise incompatible documents compatible through a unique dynamic document based on MRTs and PRTs, it is neither abstract, nor an age-old idea like Alice’s “intermedi-ated settlement.” Appellants’ Br. 32 (quoting Alice, 134 S.Ct. at 2359).

TV’s characterization, however, does not change the result. Although IV correctly observes that the ’081 patent applies to XML documents in particular (rather than any other type of document), at best, this limits the invention to a technological environment for which to apply the underlying abstract concept. But such limitations do not make an abstract concept any less abstract under step one. Intellectual Ventures I, 792 F.3d at 1366. As the specification recognizes, companies have frequently employed XML documents in routine business transactions. ’081 patent col. 1 ll. 28-36. Thus, the patent’s recitation of XML documents specifically, does little more than restrict the invention’s field of use. Such limitations do not render an otherwise abstract concept any less abstract. Affinity, 838 F.3d at 1259.

IV’s identification of the ’081 patent’s specific data structures and objects (PRTs and MRTs) also does not change our analysis under this step. In particular, TV argues that the ’081 patent creates these specific data structures to interrelate various XML documents in a particular way to ensure compatibility of otherwise incompatible documents. IV maintains that these structures provide a concrete solution through a component that detects modifications to the dynamic document and in response thereto, propagates those changes back to the underlying XML document. We disagree.

Although these data structures add a degree of particularity to the claims, the underlying concept embodied by the limitations merely encompasses the abstract idea itself of organizing, displaying, and manipulating data of particular documents. See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (“[A]ny novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis.”). The PRTs and MRTs are, at bottom, broadly defined labels for generic data types that transfer data from one type of electronic document to another — here, the so-called dynamic document. The resulting dynamic document, in turn, is nothing more than an interface for displaying and organizing this underlying data. These features, therefore, do not alter our conclusion that the claimed invention is directed to the abstract concept of collecting, displaying, and manipulating data of particular documents. Having concluded that the invention is drawn to an abstract idea, we move to step two.

2

In applying step two of the Alice analysis, we “determine whether the claims do significantly more than simply describe [the] abstract method” and thus transform the abstract idea into patentable subject matter. Ultramercial, 772 F.3d at 715. We look to see whether there are any “additional features” in the claims that constitute an “inventive concept,” thereby rendering the claims eligible for patenting even if they are directed to an abstract idea. Alice, 134 S.Ct. at 2357. Those “additional features” must be more than “well-understood, routine, conventional activity.” Mayo, 132 S.Ct. at 1298.

With regard to the claims at issue, we perceive no “inventive concept” that transforms the abstract idea of collecting, displaying, and manipulating XML data into a patent-eligible application of that abstract idea. Rather, the claims recite both a generic computer element — a processor— and a series of generic computer “components” that merely restate their individual functions — i.e., organizing, mapping, identifying, defining, detecting, and modifying. That is to say, they merely describe the functions of the abstract idea itself, without particularity. This is simply not enough under step two. See Ultramercial, 772 F.3d at 715-16 (holding the claims insufficient to supply an inventive concept because they did not “do significantly more than simply describe [the] abstract method,” but rather are simply “conventional steps, specified at a high level of generality”) (quoting Alice, 134 S.Ct. at 2357).

IV argues that the ’081 patent claims, however, unconventionally improve a technological process. The claims, according to IV, specify how to manage and modify XML documents of varying formats and syntax in a way that departed from convention. It argues that the patent accomplishes this by creating a “dynamic document” based upon the MRTs and PRTs, so the system can modify multiple sets of XML data components at once through a user interface. We conclude, however, that these data structures do not sufficiently transform the abstract concept into a patentable invention under step two. In particular, the MRTs and PRTs — although technical sounding — include generic data types for which the system can store the extracted data. See ’081 patent col. 2 ll. 4-9 (“A PRT is similar to a relational database table; they contain most of the data. An MRT includes a grouping of PRTs; they contain pointers to individual PRT records and some calculated data.”). Indeed, as the district court observed, IV set forth particular definitions for these terms that describe them as generic data structures. See J.A. 29-30 (defining a PRT as “a data type that defines a data structure to contain data extracted from XML documents” and MRT as “a data type that defines a collection of primary records types”). The mere fact that the inventor applied coined labels to conventional structures does not make the underlying concept inventive. See, e.g., Alice, 134 S.Ct. at 2352 n.2, 2360 (finding the claims abstract despite the recitation of technical-sounding names such as “shadow credit record[s]” and “shadow debit record[s]”). And the recited dynamic document provides little more than an unspecified set of rules for displaying and organizing MRTs in a user interface akin to the generic interfaces we have elsewhere explained impart no inventive concept. See, e.g., Intellectual Ventures I, 792 F.3d at 1370 (finding that the recited “interactive interface” was not a “specific application of the abstract idea that provides an inventive concept”); Affinity, 838 F.3d at 1262 (characterizing a “graphical user interface” as a “generic feature” of the invention).

IV next submits that the specific combination of PRTs, MRTs, and a dynamic document overcomes the previous'problem of the “incompatibility of XML documents with different ‘XML syntax[es]’ and different ‘XML formats, relational database schemes, and messages formats.’ ” Appellants’ Br. 40 (citing J.A. 168, 1388). In particular, IV argues that the claims set forth a unique solution to a problem with contemporary XML documents. Id. at 45. But the claims do not recite particular features to yield these advantages. Although the claims purport to modify- the underlying XML document in response to modifications made in the dynamic document, this merely reiterates the patent’s stated goal itself. Nothing in the claims indicate what steps are undertaken to overcome the stated incompatibility problems with XML documents to propagate those modifications into the XML document. Indeed, the claim language here provides only a result-oriented solution, with insufficient detail for how a computer accomplishes it. Our law demands more. See Elec. Power Grp., 830 F.3d at 1356 (cautioning against claims “so result focused, so functional, as to effectively cover any solution to an identified problem”).

In sum, evaluating these claimed elements either individually or as an ordered combination, we conclude that they recite no more than routine steps of data collection and organization using generic computer components and conventional computer data processing activities. Although this patent purports to have met a need in the art to “allow[] the user to view and update XML documents in different formats, and ... manipulate the data and perform actions without programming skills,” the claims recite nothing inventive or transformative to achieve this stated goal. ’081 patent col. 1 ll. 45-48. Thus, taken individually or in combination, the recited limitations neither improve the functions of the computer itself, nor provide specific programming, tailored software, or meaningful guidance for implementing the abstract concept. Alice, 134 S. Ct at 2359. Accordingly, they do not meaningfully limit the ■ claims to provide the requisite inventive concept under step two.

We conclude, therefore, that the asserted claims of the ’081 patent do not meet the standard for eligibility under § 101 and affirm the district court’s entry of summary judgment.

The ’002 Patent

Turning to the ’002 patent, IV appeals the district court’s finding on summary judgment of ineligible subject matter under § 101. We provided a separate analysis of this patent in our opinion in the companion appeal. See Intellectual Ven tures I LLC v. Erie Indemnity Co., Nos. 2015-1128, -1129, -1132, 850 F.3d 1315, 1329-32, 2017 WL 900018 (Fed. Cir. March 7, 2017) (affirming the district court’s dismissal under Rule 12 for reciting patent-ineligible subject matter). Because nothing in the record before us here leads us to conclude otherwise, we affirm the district court’s entry of summary judgment of ineligibility of the asserted claims on the basis of our findings and conclusions in our opinion for that appeal.

Conclusion

For the foregoing reasons, we affirm the district court.

AFFIRMED

      . IV additionally appealed the district court's finding of patent ineligibility of U.S. Patent No. 6,314,409. IV, however, withdrew this patent from appeal. IV's Mot. to Withdraw U.S. Patent No. 6,314,409 as an Appellate Issue at 2.

      . In the related JPMC matter, although the Southern District of New York rendered a finding of invalidity at summary judgment as to the '084 patent under § 101, it denied IV’s request for Rule 54 certification and immediate appeal. Thus, IV has not to date appealed the merits of that court’s § 101 findings.

      . In its reply brief, IV argues — without support — that a district court cannot use a subsequent order to "cure [the] defect” in its initial analysis. Reply Br. 24-25. Not so. The Fourth Circuit merely requires that the district court state its findings on the record or in its order. Braswell Shipyards, 2 F.3d at 1336. This is precisely what it did. J.A. 55, 1728.

      . Although IV did not expressly concede that claim 21 is representative of the claimed invention, it acknowledged that the invention "is memorialized in [this claim].” Appellants’ Br. 11. Accordingly, we conclude that claim 21 is representative. See also J.A. 12 (asserting that the parties agreed that claim 21 is representative).


source: Caselaw Access Project

author: MOORE, Circuit Judge.

license: Public Domain

text:
    THALES VISIONIX INC., Plaintiff-Appellant v. UNITED STATES, Defendant-Appellee Elbit Systems of America, LLC, Third Party Defendant-Appellee
    2015-5150
    United States Court of Appeals, Federal Circuit.
    Decided: March 8, 2017

      Meredith Martin Addy, Tabet DiVito & Rothstein, LLC, Chicago, IL, argued for plaintiff-appellant. Also represented by Ashley Crettol Insalaco, Daniel I. Kon-ieczny.
    Andrew Paul Zager, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Benjamin C. Mizer, John J. Fargo.
    Kurt Calía, Covington & Burling LLP, Redwood Shores, CA, argued for third party defendant-appellee. Also represented by John Arthur Kelly, Matthew Aaron Kudzin, Ranganath Sudarshan, Washington, DC.
    Jeffrey A. Lamken, MoloLamken LLP, Washington, DC, for amicus curiae BSA | The Software Alliance. Also represented by Michael Gregory Pattillo, Jr.
    Before MOORE, WALLACH, and STOLL, Circuit Judges.
   MOORE, Circuit Judge.

Thales Visionix, Inc. (“TVI”) appeals from the U.S. Court of Federal Claims (“Claims Court”) judgment on the pleadings holding that claims 1-5, 11-13, 20, 22-26, 32-34, and 41 of U.S. Patent No. 6,474,159 (“159 patent”) are directed to patent-ineligible subject matter. Thales Visionix, Inc. v. United States, 122 Fed.Cl. 245, 257 (2015). We reverse the Claims Court’s determination for all claims and remand for further proceedings.

Background

The 159 patent discloses an inertial tracking system for tracking the motion of an object relative to a moving reference frame. 159 patent at 1:54-56. Inertial sensors, such as accelerometers and gyroscopes, measure the specific forces associated with changes in a sensor’s position and orientation relative to a known starting position. Such sensors are used in a wide variety of applications, including aircraft navigation and virtual reality-simulations. When mounted on a moving object, inertial sensors can calculate the position, orientation, and velocity of the object in 3-dimensional space, based on a specified starting point, without the need for any other external information. Because small errors in the measurement of acceleration and angular velocity translate to large errors in position over time, inertial systems generally include at least one other type of sensor, such as an optical or magnetic sensor, to intermittently correct these errors that compound over time.

The patent disclosure recognized that conventional solutions for tracking inertial motion of an object on a moving platform were flawed because both object- and platform-based inertial sensors measured motion relative to earth, and the error-correcting sensors on the tracked object measured position relative to the moving platform. Id. at 1:23-42. Attempting to fuse this data produced inconsistent position information when the moving platform accelerated or turned. Id.

The inertial sensors disclosed in the T59 patent do not use the conventional approach of measuring inertial changes with respect to the earth. Id. at 7:12-23. Instead, the platform (e.g., vehicle) inertial sensors directly measure the gravitational field in the platform frame. Id. at 7:12-49, fig. 3D. The object (e.g., helmet) inertial sensors then calculate position information relative to the frame of the moving platform. Id. at 7:41-67, 8:1-17, fig. 3D. By changing the reference frame, one can track the position and orientation of the object within the moving platform without input from a vehicle attitude reference system or calculating orientation or position of the moving platform itself. Id. at 8:34-41.

There are multiple advantages of the disclosed system over the prior art. First, it increases the accuracy with which inertial sensors measure the tracked object on the moving frame. Id. at 11:31-34. When the moving platform accelerates or turns, the inertial sensor on the platform directly measures the gravitational effect in the moving reference frame and the system therefore requires fewer measured inputs (and fewer. points of potential error) to determine the position and orientation of the tracked object. Id. at 8:34-37. Second, the disclosed system can operate independently, without requiring other hardware on the moving platform that determine the orientation or position of the moving platform itself. Id. at 8:34-41. Third, because the whole system is installed on the inside of the moving platform, installation is also simpler than previous inertial systems. Id. at 7:5-10.

Claims 1 and 22, the only independent claims, recite:

1. A system for tracking the motion of an object relative to a moving reference frame, comprising:
a first inertial sensor mounted on the tracked object;
a second inertial sensor mounted on the moving reference frame; and
an element adapted to receive signals from said first and second inertial sensors and configured to determine an orientation of the object relative to the moving reference frame based on the signals received from the first and second inertial sensors.
22. A method comprising determining an orientation of an object relative to a moving reference frame based on signals from two inertial sensors mounted respectively on the object and on the moving reference frame.

TVI sued the government and asserted the helmet-mounted display system (“HMDS”) in the F-35 Joint Strike Fighter infringes claims 1-5, 11-13, 20, 22-26, 32-34, and 41 of the 159 patent. Elbit Systems of America (“Elbit”), the government subcontractor that produces the HMDS, joined the case as a third-party defendant. The government and Elbit moved for judgment on the pleadings, arguing all asserted claims disclosed patent-ineligible subject matter under 35 U.S.C. § 101 because they claim a law of nature.

The Claims Court granted the defendants’ motion for judgment on the pleadings and held all claims directed to patent-ineligible subject matter under 35 U.S.C. § 101. It found the claims (1) are directed to the abstract idea of using laws of nature governing motion to track two objects, and (2)provide no inventive concept beyond the abstract idea. TVI appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

Discussion

We review a decision from the Claims Court granting judgment on the pleadings de novo. Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009). We also review a determination that claims are not directed to patent-eligible subject matter de novo. Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016).

Section 101 provides that anyone who “invents or discovers • any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof’ may obtain a patent. 35 U.S.C. § 101. The Supreme Court has repeatedly emphasized that patent protection should not extend to claims that monopolize “the basic tools of scientific and technological work.” Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012); Alice Corp. Pty. v. CLS Bank Int'l, - U.S. -, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014). Accordingly, laws of nature, natural phenomena, and abstract ideas are not patent-eligible subject matter. Alice, 134 S.Ct. at 2354.

The Supreme Court’s two-part Alice framework guides courts in distinguishing between patent claims that impermissi-bly claim the “building blocks of human ingenuity” and those that “integrate the building blocks into something more.” Id. (internal quotations omitted). First, we “determine whether the claims at issue are directed to a patent-ineligible concept.” Id. at 2355. If so, we “examine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Id. at 2357 (quoting Mayo, 566 U.S. at 72, 79, 132 S.Ct. 1289).

We begin our analysis at Alice step one: “whether the claims at issue are directed to a patent-ineligible concept.” Id. at 2355. While the two steps of the Alice framework are related, the “Supreme Court’s formulation makes clear that the first-stage filter is a meaningful one, sometimes ending the § 101 inquiry.” Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016).

The Supreme Court “has not established a definitive rule to determine what constitutes an ‘abstract idea’ ” for the purposes of step one. Enfish, 822 F.3d at 1334 (citing Alice, 134 S.Ct. at 2357). We have held claims ineligible as directed to an abstract idea when they merely collect electronic information, display information, or embody mental processes that could be performed by humans. Elec. Power Grp., 830 F.3d at 1353-54 (collecting cases). At the same time, “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo, 566 U.S. at 71, 132 S.Ct. 1289. We must therefore ensure at step one that we articulate what the claims are directed to with enough specificity to ensure the step one inquiry is meaningful. Alice, 134 S.Ct. at 2354 (“[W]e tread carefully in construing this exclusionary principle lest it swallow all of patent law.”).

A number of cases are instructive as to the step one analysis. In Rapid Litigation Management Ltd. v. CellzDirect, Inc., we evaluated claims for an improved process of preserving a type of liver cell by taking previously frozen and thawed cells, separating viable cells from non-viable ones, and recovering and refreezing the viable cells. 827 F.3d 1042, 1045 (Fed. Cir. 2016). We held the claims patent-eligible under step one of Alice because they were directed to “a new and useful laboratory technique for preserving [liver cells].” Id. at 1048. While “the inventors certainly discovered the cells’ ability to survive multiple freeze-thaw cycles,” they did not claim the natural law itself, but a particular application of the “natural discovery to create a new and improved way of preserving [liver] cells for later use.” Id.

In Enfish LLC v. Microsoft Corp., we held claims directed to a self-referential logical model for a computer database patent-eligible under step one of Alice. 822 F.3d at 1330. The disclosed technique enabled faster searching and more effective storage of data than previous methods. Id. at 1333. We found the claims directed to “a specific improvement to the way computers operate, embodied in the self-referential table.” Id. at 1336. We explained that the claims are “not simply directed to any form of storing tabular data, but instead are specifically directed to a self-referential table for a computer database” that functions differently than conventional databases. Id. at 1337.

In Diamond v. Diehr, the Supreme Court confirmed the eligibility of patent claims despite the inclusion of a mathematical formula in a claimed method for molding raw, uncured rubber into cured rubber products. 450 U.S. 175, 177, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). The claimed method used the well-known Arrhenius equation to calculate the optimal cure time using, among other variables, the internal temperature of the mold. Id. at 177 n.2, 101 S.Ct. 1048. The invention improved upon prior art molding methods by constantly measuring the actual temperature inside the mold, recalculating the ideal cure time, and automatically opening the press when the ideal cure time equaled the actual time elapsed. Id. at 178-79, 101 S.Ct. 1048.

The Supreme Court recognized that a mathematical formula like the Arrhenius equation is not itself patent-eligible subject matter, even if limited to a particular technological environment or accompanied by “insignificant post-solution activity.” Id. at 191-92, 101 S.Ct. 1048; see Parker v. Flook, 437 U.S. 584, 585-86, 594-95, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978). Nonetheless, the Supreme Court held that the claims in Diehr covered patent-eligible subject matter because they “describe[d] a process of curing rubber beginning with the loading of the mold and ending with the opening of the press and the production of a synthetic rubber product that has been perfectly cured — a result heretofore unknown in the art.” Diehr, 450 U.S. at 193 n.15, 101 S.Ct. 1048. It explained that claims are patent eligible under § 101 “when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect.” Id. at 192, 101 S.Ct. 1048. In terms of the modern day Alice test, the Diehr claims were directed to an improvement in the rubber curing process, not a mathematical formula.

For the purpose of evaluating patent eligibility, the ’159 patent claims are nearly indistinguishable from the claims at issue in Diehr. Claim 1, the independent system claim, requires: (1) a first inertial sensor mounted on the tracked object; (2) a second inertial sensor mounted on the moving platform; and (3) an element that uses the data from the two inertial sensors to calculate the orientation of the tracked object relative to the moving platform, as disclosed in the specification. Claim 22, the independent method claim, requires: (1) a first inertial sensor on a tracked object; (2) a second inertial sensor on the moving platform; and (3) the determination of orientation of the tracked object “based on” the signals from the two inertial sensors, as disclosed in the specification. The navigation equations in the ’159 patent are derived from this particular arrangement of sensors. 159 patent at 7:41-8:55. While the claims utilize mathematical equations to determine the orientation of the object relative to the moving reference frame, the equations- — dictated by the placement of the inertial sensors and application of laws of physics — serve only to tabulate the position and orientation information in this configuration. This arrangement is analogous to the claims in Diehr, which required the temperature measurement “at a location closely adjacent to the mold cavity in the press during molding.” Diehr, 450 U.S. at 179 n.5, 101 S.Ct. 1048. Just as the claims in Diehr reduced the likelihood that the rubber molding process would result in “overcuring” or “undercuring,” id. at 187, 101 S.Ct. 1048, the claims here result in a system that reduces errors in an inertial system that tracks an object on a moving platform.

The ’159 patent claims provide a method that eliminates many “complications” inherent in previous solutions for determining position and orientation of an object on a moving platform. ’159 patent at 5:62-6:32. Because the motion of a moving platform like a plane “is more dynamic and unpredictable than the earth’s rotation,” a traditional system (which measured inertial data with respect to the earth) had difficulty accurately calculating inertial data of an object on a moving platform. Id. at 5:60-6:16. Though the unconventional utilization of inertial sensors as specified by the ’159 patent “may seem somewhat strange” to those within the field, id. at 7:19-21, this combination of sensor placement and calculation based on a different reference frame mitigates errors by eliminating inertial calculations with respect to the earth. Id. at 7:41-8:41. The resulting system works with any type of moving platform and is simpler to install than conventional systems. Id. at 7:5-8. The system is also beneficially self-contained: it requires no external information about the orientation or position of the platform. Id. at 8:34-41, 11:34-38.

These claims are not merely directed to the abstract idea of using “mathematical equations for determining the relative position of a moving object to a moving reference frame,” as the Claims Court found. Thales, 122 Fed.Cl. at 252. Rather, the claims are directed to systems and methods that use inertial sensors in a non-conventional manner to reduce errors in measuring the relative position and orientation of a moving object on a moving reference frame. At step one, “it is not enough to merely identify a patent-ineligible concept underlying the claim; we must determine whether that patent-ineligible concept is what the claim is ‘directed to.’ ” Rapid Litig., 827 F.3d at 1050. Just as a natural law can be utilized to create an improved laboratory technique for preserving liver cells, id. at 1048, so can the application of physics create an improved technique for measuring movement of an object on a moving platform. Just as claims directed to a new and useful technique for defining a database that runs on general-purpose computer equipment are patent eligible, Enfish, 822 F.3d at 1337-38, so too are claims directed to a new and useful technique for using sensors to more efficiently track an object on a moving platform. That a mathematical equation is required to complete the claimed method and system does not doom the claims to abstraction.

We hold that the ’159 patent claims at issue in this appeal are not directed to an abstract idea. The claims specify a particular configuration of inertial sensors and a particular method of using the raw data from the sensors in order to more accurately calculate the position and orientation of an object on a moving platform. The mathematical equations are a consequence of the arrangement of the sensors and the unconventional choice of reference frame in order to cálculate position and orientation. Far from claiming the equations themselves, the claims seek to protect only the application of physics to the unconventional configuration of sensors as disclosed. As such, these claims are not directed to an abstract idea and thus the claims survive Alice step one.

Because we find the claims are not directed to an abstract idea, we need not proceed to step two. Alice, 134 S.Ct. at 2355; Enfish, 822 F.3d at 1339. The claims are patent eligible under 35 U.S.C. § 101.

Conclusion

For the foregoing reasons, we reverse the Claims Court’s determination that the ’159 patent claims patent-ineligible subject matter and remand for further proceedings.

REVERSED AND REMANDED

      . The parties do not agree to any representative claims, and TVI argues that the Claims Court erred by failing to separately consider the eligibility of dependent claims. Because we hold the independent claims patent eligible, we do not reach this issue.

      . Diehr preceded the evolution of the Supreme Court's two-step framework and therefore did not separate its analysis into the two Alice steps. We do not hold that Diehr is instructive precedent only for Alice step one.


author: HUGHES, Circuit Judge.

text:
    Michael ALAMO, Emmett Brannen, William Brezenski, Ivy Jim Brinson, Brian Caldwell, Thomas J Demajo, III, Mark Deunger, Sandra Deunger, Douglas L Diller, Bernard J Fermin, Tamara Grandia, Carl Gregory, Mark Hahn, Lisa Ann Hahn, Kimberly Harper, Crystal Hensler, Juan Hernandez, William J. Johnson, Floyd Justice, Margaret King, Gloria D. Long, Jim Ochoa, James G. Ooms, Arturo Rincones, Thomas L. Roberts, Warren F. Scribner, II, Brian Tiner, Craig R. Wilcox, James Willis, Plaintiffs-Appellants v. UNITED STATES, Defendant-Appellee
    2015-5149
    United States Court of Appeals, Federal Circuit.
    Decided: March 9, 2017

      Jason I. Weisbrot, Snider & Associates, LLC, Baltimore, MD, argued for plaintiffs-appellants. Also represented by Jacob Y. Statman.
    Emma Bond, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Benjamín C. Mizer, Robert E. Kirschman, Jr., Steven J. Gillingham; Rebecca E. Ausprung, Civilian Personnel Branch, United States Army Litigation Division, Washington, DC.
    Before PROST, Chief Judge, REYNA and HUGHES, Circuit Judges.
   HUGHES, Circuit Judge.

Appellants, current and former Army emergency medical technicians and para-,' medics, appeal the Court of Federal Claims’ determination that the government properly compensates them for their regularly scheduled overtime work under the Fair Labor Standards Act. Because we find that the government employs the correct methodology to determine Appellants’ pay, we affirm.

I

During the relevant period, the Army employed Appellants (EMTs) .to provide emergency medical services at Fort Stewart, Liberty, Georgia. Before October 2012, the EMTs were generally scheduled for a compressed schedule consisting of 24 hours on-duty followed by 48 hours off-duty. After October 2012, the EMTs switched to a schedule consisting of two 48-hour workweeks. Because the EMTs worked a schedule of more than 40 hours in one week, they were entitled to FLSA overtime pay. For a typical biweekly pay period, the government compensated the EMTs with (1) basic pay under the Federal Employees Pay Act (also known as Title 5); (2) standby duty premium pay under Title 5; and (3) FLSA overtime pay for regularly scheduled overtime. J.A. 38, 40.

The EMTs filed suit in the Court of Federal Claims, alleging that the government underpaid them by using an incorrect formula to calculate their FLSA overtime. The parties cross-moved for summary judgment. The court granted the government’s motion and denied the EMTs’ motion, finding that no underpayment occurred because the government applied the correct methodology to calculate the EMTs’ pay. The EMTs timely appealed, and we have jurisdiction under 28 U.S.C. § 1295(a)(3).

II

“We review the Court of Federal Claims’ grant of summary judgment de novo. Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.” Crooker v. United States, 828 F.3d 1357, 1360 (Fed. Cir. 2016) (internal citations and quotation marks omitted).

A

Under the FLSA, an agency must compensate its overtime-eligible employees “for all hours of work in excess of 8 in a day or 40 in a workweek at a rate equal to one and one-half times the employee’s hourly regular rate of pay,” subject to certain exceptions that do not apply here. 5 C.F.R. § 551.501(a); see also 29 U.S.C. § 207(a)(1). If an employee qualifies for FLSA overtime, he or she is entitled to “(1) [t]he straight time rate of pay times all overtime hours worked; plus (2) [o]ne-half times the employee’s hourly regular rate of pay times all overtime hours worked.” 5 C.F.R. § 551.512(a).

The first question presented is whether the EMTs receive “the straight time rate of pay times all overtime hours worked” when the government pays them annual premium standby pay in addition to basic pay. We find that they do, and therefore, that the government calculated the EMTs’ pay correctly.

Ordinarily, “[a]n employee’s ‘straight time rate of pay’ is equal to the employee’s rate of pay for his or her position (exclusive of any premiums, differentials, or cash awards or bonuses).” Id. § 551.512(b). But the EMTs’ straight time rate of pay is calculated differently because they receive annual premium standby pay in addition to their basic pay. The Army pays the EMTs standby pay because their job requires them “regularly to remain at, or within the confines of [their] station during longer than ordinary periods of duty, a substantial part of which consists of remaining in a standby status rather than performing work.” Id. § 550.141; see. 5 U.S.C. § 5545(c)(1). That is, the EMTs receive standby pay because they must remain at their duty stations longer than 40 hours per week. See 5 C.F.R. § 550.143(c). Thus, because the EMTs receive standby pay, their “straight time rate of pay” is “equal to basic pay plus annual premium pay divided by the hours for which the basic pay plus annual premium pay are intended.” Id. § 551.512(b) (emphasis added).

We conclude that all regularly scheduled hours that the EMTs work, including all regularly scheduled overtime hours, are “the hours for which basic pay plus annual premium pay is intended.” The EMTs receive standby pay to compensatei for being on duty for “more than 40 hours a week,” id. § 550.143(c), which is also what overtime compensates. Yet, standby pay compensation is “not received in return for any particular hours of work,” but instead, “is a function of the government’s recognition that” the EMTs “don’t work the typical work schedule of the federal system.” Zumerling v. Devine, 769 F.2d 745, 751 (Fed. Cir. 1985). Accordingly, the EMTs’ pay (basic plus standby pay), taken together, compensates them the same for ■hour 1, hour 41, and hour 70 in a single workweek. This is because standby pay balances the regular inconvenience to the EMTs of confinement to a duty station for longer than ordinary work hours and the reality that' they may spend these hours sleeping, reading, eating, playing games on a smartphone, and the like. As a result, standby pay compensates EMTs for the fact that they are on-duty for more than 40 hours. And by prescribing a separate formula for calculating the straight time rate of pay when an employee receives standby pay, § 551.512(b) reflects OPM’s intent to cover all regularly scheduled hours (including regularly scheduled overtime hours) through the combination of basic and standby pay. Therefore, the combination of basic and standby pay properly compensates straight time for all regularly scheduled hours that the EMTs work.

The government also does not run afoul of §§ 551.512 and 551.513, as the EMTs contend. Section 551.512(c) requires the government to pay employees “at a rate at least equal to the employee’s straight time rate of pay for all nonovertime hours of work in the workweek,” and § 551.513 mandates that employees are paid their FLSA overtime in addition to other pay. As already discussed, the EMTs receive the additional half-time bonus on top of their straight time rate of pay, which itself covers all hours worked. Accordingly, the government’s formula satisfies both provisions.

To the extent that the regulatory language is unclear, we find that contextual analysis of Title 5 and the FLSA resolves any ambiguity. Cf. King v. Burwell, — U.S. -, 135 S.Ct. 2480, 2492, 192 L.Ed.2d 483 (2015) (“A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme ... because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.” (quoting United Sav. Ass’n of Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988))). Broadly speaking, the FLSA gives employees their normal compensation for a regularly scheduled overtime hour, plus an additional half-time bonus. The government’s calculation does the same: it gives EMTs their normal compensation for regularly scheduled overtime through the payrnent of basic plus premium pay and pays the EMTs an additional half-time bonus. And, by design in Title 5, Congress and OPM intended federal employees working standby hours to receive less pay than those who actively work during their entire regularly scheduled overtime. See 5 U.S.C. § 5545(c)(1) (allowing an agency to require an employee to “receive premium pay for [standby] duty ... instead of premium pay provided by other provisions of this sub-chapter, except for irregular, unscheduled overtime duty in excess of his regularly scheduled weekly tour”); 5 C.F.R. § 550.141 (“An agency may pay premium pay on an annual basis, instead of the premium pay prescribed in this subpart for regularly scheduled overtime .... ”). That design would be frustrated if the EMTs were to receive an additional FLSA straight-time payment for their overtime.

Moreover, we must interpret the governing regulations in light of OPM’s wide discretion to prescribe rules for federal employee pay. As we have noted before, Congress created a “flotsam of incomplete legislation” when it extended the FLSA to cover federal employees already covered by Title 5. Abreu v. United States, 948 F.2d 1229, 1236 (Fed. Cir. 1991). But because Title 5 and the FLSA “do not mesh with the machined precision of the gears in a Swiss watch,” we interpret these statutes and regulations in a way that “ensure[s] that OPM has put together the various pieces of pay entitlement in a way that eliminates gaps and minimizes overlaps.” Id. Here, giving the EMTs additional straight time payment would create a significant “overlap,” as they would receive a full time-and-a-half overtime payment for the same work that their standby pay already covers. The EMTs have not demonstrated that Congress or OPM intended federal workers to receive such a windfall, particularly where the very nature of standby work means that the employees are not actively working all hours for which they receive pay.

Finally, the Department of Labor’s regulations applicable to private-sector, salaried, non-exempt employees support this result. Cf. Abreu, 948 F.2d at 1231 n.6 (describing Congress’ intent, when delegating authority to OPM to administer the FLSA, to assure consistency with Department of Labor’s rules for private sector). The EMTs’ annual basic plus premium pay, paid biweekly, is akin to an annual salary that the EMTs accept to compensate for all regularly scheduled hours. Under 29 C.F.R. § 778.114(a), a private employer can satisfy its FLSA obligations by paying “extra compensation, in addition to such salary, for all [regularly scheduled] overtime hours worked at a rate not less than one-half his regular rate of pay.” The rationale is written directly into the regulation: “Payment for overtime hours at one-half such rate in addition to the salary satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate, under the salary arrangement.” Id. That same logic applies here because the additional standby premium pay already compensates for the unusual nature of the EMTs’ schedule. Accordingly, the additional half-time payment sufficiently fulfills the government’s FLSA overtime obligation.

B

The EMTs also argue that the Army miscalculated the EMTs’ regular rate of pay when determining the half-time portion of their FLSA pay. See generally 5 C.F.R. § 551.512(a)(2) (describing halftime portion). The EMTs concede that their argument fails if we find, as we have, that the Army properly paid them the “straight time” portion of overtime under the FLSA. Appellants’ Br. at 32-83. Accordingly, we conclude that the Army properly calculated the EMTs’ regular rate of pay.

C

Finally, the EMTs argue that they are entitled to have their FLSA overtime calculated on a biweekly rather than weekly basis. However, the plain language of the applicable regulations requires FLSA overtime to be calculated on a weekly bá-sis. An employee is entitled to overtime “for all hours of work in excess of 8 in a day or 40 in a workweek.” 5 C.F.R. § 551.501(a) (emphasis added). For employees who are subject to a compressed work schedule (like the EMTs), a “workweek” is “the same as the administrative workweek defined in [5 C.F.R.] § 610.102.” Id. § 551.501(b). Section 610.102 defines “[ajdministrative workweek” as “any period of 7 consecutive 24-hour periods designated” by an agency head. Accordingly, the Army correctly calculates the EMTs’ pay on a weekly basis.

Ill

Because the government employs the correct methodology to calculate the EMTs’ pay, we affirm the Court of Federal Claims’ judgment.

AFFIRMED

      . Several factors not relevant here may affect the biweekly calculation of an EMT’s pay for a given week. For example, an EMT may work unscheduled overtime or take some type of paid or unpaid leave. We confine our discussion to the three areas of pay we have identified.

      . Because the parties agree that the relevant OPM regulations fairly implement their respective statutes, we refer to the FLSA and its implementing regulations together as the FLSA, and to Title 5 and its implementing regulations together as Title 5.

      . Although the FLSA does not distinguish between standby and actively worked time when defining "work,” Title 5 draws such a distinction.


author: GRIFFITH, Circuit Judge:

text:
    MATTHEW A. GOLDSTEIN, PLLC, Appellant v. UNITED STATES DEPARTMENT OF STATE, et al., Appellees
    No. 16-5034
    United States Court of Appeals, District of Columbia Circuit.
    Argued November 21, 2016
    Decided March 14, 2017
    Matthew A. Goldstein argued the cause and filed the briefs for appellant.
    Katherine Twomey Allen, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and H. Thomas Byron, III, Attorney.
    Before: GRIFFITH, SRINIVASAN, and MILLETT, Circuit Judges.
   GRIFFITH, Circuit Judge:

The plaintiff is a law firm that advises clients on U.S. law that regulates the international arms trade. Concerned that the State Department might enforce arms-control regulations against it in a way that would force disclosure of confidential client information, the law firm seeks declaratory and injunctive relief. The district court dismissed the action for lack of standing and ripeness. We affirm on the ground that the plaintiff lacks standing to bring a pre-enforcement challenge because it faces no credible threat of enforcement.

I

A

The Department of State regulates international arms brokering under the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). In the interest of national security, the Act authorizes the President to designate various weapons and technologies as “defense articles” and to regulate their import and export. 22 U.S.C. § 2778(a)(1). All weapons or technologies so designated are placed on what is known as the United States Munitions List, see id., which currently includes items such as ballistic missiles, rockets, bombs, mines, tanks, and military submarines.

The Act requires those who manufacture, import, or export these defense articles to register with the U.S. government, see id. § 2778(b)(l)(A)(i), according to procedures prescribed by the ITAR, see 22 C.F.R. §§ 120-130. The Act also requires that those seeking to finance, transport, or assist in the manufacturing, export, or import of defense articles' — i.e., brokers— register with the State Department and obtain departmental approval before engaging in brokering activities. See 22 U.S.C. § 2778(b)(1)(A)(ii)(I)-(III).

Part 129 of the ITAR governs these brokers. Before a person may be approved to engage in brokering activities, he must disclose to the State Department certain information, including the specific activity he intends to undertake; the name, nationality, address, and place of business of those involved; a description of the defense article at issue; the defense article’s destination; and what the defense article will be used for. See 22 C.F.R. § 129.6(a)-(b). Registered brokers must also file annual reports with the State Department and maintain records related to their brokering activities. Id. §§ 129.10-11.

As relevant here, in 2013 the State Department promulgated a rule to clarify that “brokering activities” include “[s]oli-citing, promoting, negotiating, contracting for, arranging, or otherwise assisting in the purchase, sale, transfer, loan, or lease of a defense article or defense service,” id. § 129.2(b)(l)(ii), but exclude “activities by an attorney that do not extend beyond the provision of legal advice to clients,” id. § 129.2(b)(2)(iv). The preamble to the rule elaborates that “ ‘legal advice’ includes the provision of export compliance advice by an attorney to a client.” Amendment to the International Traffic in Arms Regulations, 78 Fed. Reg. 52,681, 52,681 (Aug. 26, 2013). According to the State Department’s website, legal advice that is not considered a brokering activity would also include

[a]dvising on the legality of a transaction, such as advising whether a transaction is ITAR compliant, tax rates or other laws may be preferential, drafting of contract terms where parties to the transaction have already been identified by the client, representing [a] client to a client-identified foreign party, conducting ITAR audits, and/or providing training or assistance with ITAR compliance procedures.

J.A. 103-04. Not all actions taken by attorneys are exempt from the regulations, however. If attorneys

engage in activities that go beyond providing consulting or legal advice, including being a third party to the transaction, or ... [if they] engage[ ] in soliciting, locating a buyer or seller, introducing or recommending specific parties, structuring the transaction, marketing, promoting, and/or negotiating ITAR-controlled defense articles arid services on behalf of their clients beyond contract terms of already identified foreign parties by [their] client, then such activities may constitute brokering activities under ITAR.

22 C.F.R. § 129.9.

The State Department has established an optional process under the ITAR for requesting an official determination on whether a particular activity constitutes brokering. See id. Submitting such a request requires providing essentially the same information needed to obtain approval for a brokering activity, including the specific activities to be undertaken and identities of all the parties involved. Id. § mWdHd).

B

Matthew A. Goldstein is the principal attorney in a law firm that bears his name and specializes in providing legal advice to clients involved in transactions subject to the ITAR. Goldstein attests that his firm “regularly represents clients in the preparation of the terms and conditions of sale, user agreements, vendor certifications, and other legal documents” for ITAR-related transactions. J.A. 51-52. According to Goldstein, his firm’s clients often have not identified the foreign parties that will be involved in prospective transactions at the time the firm provides its legal advice.

Soon after the State Department promulgated its 2013 regulation explicitly excluding legal services from the ITAR’s definition of brokering activities, Goldstein sought an advisory opinion from the Department pursuant to 22 C.F.R. § 126.9(a), asking whether six categories of services ■his firm provides were regulated or exempt. These services include advising clients on how to structure sales of defense articles, preparing sales contracts for these items, drafting technical-assistance agreements, advising on the availability of financing, advising on and preparing sales proposals, and corresponding and meeting with U.S. government officials. However, Goldstein offered the State Department no details about any past or contemplated transactions.

Goldstein asserts that, nearly a year after he requested an advisory opinion, the head of compliance at the State Department called him to say that the services described in his request would not be subject to Part 129 so long as his clients did not pay his firm a contingency fee or a commission. Relying on this advice, Gold-stein withdrew his request. The State Department responded with a letter, advising Goldstein that his initial request and the phone conversation “lacked sufficient detail for the Department to make an official determination as to whether the activities discussed constituted brokering activities.” J.A. 36 (emphasis added). The letter also referred him to the Frequently Asked Questions page on the State Department’s website.

Shortly thereafter, Goldstein’s firm filed suit in district court alleging that the State Department lacked constitutional and statutory authority to apply Part 129 to bona fide legal advice and seeking declaratory and injunctive relief to prevent the Department from requiring the firm to register as a broker. After the firm filed suit, the State Department sent Goldstein another letter. This letter, responding to the particulars of Goldstein’s initial request for an advisory opinion, informed him that providing traditional legal advice would not qualify as a brokering activity — at least in situations where the foreign party had already been identified. The reason for this disclaimer, the Department subsequently explained, is that lawyers qualify as brokers when they work to find foreign counterparties to transactions for their clients; when the foreign party is already known, the risk that'the lawyer is acting as a finder is eliminated.

The district court dismissed the firm’s lawsuit for lack of standing. The court held that the complaint failed to allege with specificity that the law firm was engaged in “brokering activities” and what type of information the firm would need to disclose that would run afoul of its duties of confidentiality. The court also observed that the firm’s allegations of the State Department’s threat of enforcement were speculative at best. In addition, the court held, for similar reasons, that the plaintiffs claims were not ripe. The plaintiff timely filed its notice of appeal, and we have jurisdiction pursuant to 28 U.S.C. § 1291.

II

“We review a dismissal for lack of standing de novo.” Renal Physicians Ass’n v. U.S. Dep’t of Health & Human Servs., 489 F.3d 1267, 1273 (D.C. Cir. 2007). In reviewing a district court’s grant of “a motion to dismiss for want of standing,” we “must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

The question before us is whether the law firm has standing to seek to enjoin the State Department from enforcing its regulations governing arms brokering. The firm has failed, however, to demonstrate its standing to seek pre-en-forcement relief: it has not “suffered an ‘injury in fact[]’ that is (a) concrete and particularized and (b) actual or imminent....” Sabre, Inc. v. U.S. Dep’t of Transp., 429 F.3d 1113, 1117 (D.C. Cir. 2005) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000)). It is true that a plaintiff is not required “to expose himself to liability before bringing suit to challenge the basis” for an enforcement action by the government. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128-29, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007). After all, a plaintiff can seek pre-enforcement review when the threat of enforcement is “sufficiently imminent.” Susan B. Anthony List v. Driehaus, — U.S. -, 134 S.Ct. 2334, 2342, 189 L.Ed.2d 246 (2014). But there is something fundamental to a pre-enforcement challenge that is missing here. There must be some desired conduct by the plaintiff that might trigger an enforcement action in the first place. Cf. Abbott Labs. v. Gardner, 387 U.S. 136, 154, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967) (“[Petitioners have sufficient standing as plaintiffs [because] the regulation is directed at them in particular; it requires them to make significant changes in their everyday business practices; if they fail to observe the [agencyj’s rule[,] they are quite clearly exposed to the imposition of strong sanctions.”); Susan B. Anthony List, 134 S.Ct. at 2342 (explaining that pre-enforcement constitutional challenges to criminal statutes require plaintiffs to allege “an intention to engage in a course of conduct ... proscribed by [the] statute,” under which “there exists a credible threat of prosecution” (quoting Babbitt v. United Farm, Workers Nat’l Union, 442 U.S. 289, 298, 99 S.Ct. 2301, 60 L.Ed.2d 895 (1979))). But here, we have no facts from which to conclude that the law firm risks incurring any liability by failing to register with the State Department. Indeed, Goldstein offers only vague and general descriptions of legal activities that the firm intends to undertake, none of which the State Department views as brokering, as the Department has made abundantly clear on its website and, more particularly, at oral argument before this court. Unsurprisingly, then, the State Department has shown no intention of enforcing the brokering regulations against Goldstein’s law firm.

The 2013 regulation is straightforward: “[A]ctivities by an attorney that do not extend beyond the provision of legal advice to clients” are not brokering activities. 22 C.F.R. § 129.2(b)(2)(iv). The State Department understands all of the activities Gold-stein has described to fit under that umbrella. As government counsel explained at oral argument, Goldstein has “given no indication that” his firm does anything “extending] beyond” legal advice. Oral Arg. Tr. 30:3-10. In the State Department’s view, then, there is no reason to believe that Goldstein’s firm engages in brokering activities within the meaning of Part 129. As long as the firm merely provides the legal services Goldstein describes, it faces no material risk of enforcement from the State Department. His firm therefore need not fear that it will have to disclose confidential client information or otherwise take steps to register.

True, an attorney like Goldstein could provide legal advice in a manner that constituted brokering, but the State Department has explained that the only such situation it has identified is when an attorney acts as a “finder” by, for example, helping clients to identify or locate foreign counterparties for proposed transactions. See Oral Arg. Tr. 38:10-14 (government counsel explaining that “the only example ... that the Agency has been able to identify” of an attorney providing legal advice in a manner that implicates the brokering regulation involves the use of that “legal advice to steer a client towards a particular buyer or a particular seller”). The law firm simply has alleged no facts suggesting that it intends to act as a finder in any capacity. Moreover, Goldstein has expressly denied that his firm has any plan or desire to do so. See Appellant’s Br. 24; see also Oral Arg. Tr. 38:14-16 (government counsel agreeing that “here the Plaintiff has explicitly disclaimed” acting as a finder).

The law firm’s fear that it may be the target of Department enforcement seems to be based on a misunderstanding of the letter that Goldstein received from the State Department after his firm filed suit, in which the Department advised that Goldstein’s proposed activities would be exempt “as long as” the foreign parties had already been identified. J.A. 40. Focusing on the “as long as” language, the firm argues that it must be subject to the requirements of. Part 129 because it “often” provides these services before its clients have identified the foreign parties to proposed transactions. Appellant’s Reply Br. 5 (“Defendants argue ‘Plaintiff has not adequately alleged that he has engaged in or will engage in any conduct regulated as brokering activity[] under part 129.’ ... But Plaintiff has repeatedly stated that it regularly provides legal advice to clients on transactions where the clients have not identified all parties to the transactions.”).

The letter, however, did not state that all' legal advice on international arms transactions in which foreign parties are unidentified necessarily constitutes brokering. On the contrary, the “as long as” language in the State Department’s letter simply creates a limited safe harbor: when an attorney provides ordinary legal services to a client in a situation where the foreign party has been identified, it is especially clear that the attorney is not helping to “find” the foreign party to the transaction — and thus not engaging in brokering activities. If the foreign party has not been identified, that merely leaves open the possibility that the attorney may be .acting as a finder. But the State Department does not take the position that attorneys engage in brokering every time they provide legal advice relating to transactions with foreign parties not yet identified. See Appellees’ Br. 27 (“[Pjlaintiff mistakenly assumes that all advice on transactions in which the foreign parties are not identified constitutes brokering.”). Rather, its view is that attorneys must go outside the bounds of providing proper legal counsel, and instead must actually undertake brokering measures. Contrary to Goldstein’s argument, then, the plaintiffs stated intention to provide legal advice to clients on transactions where foreign parties are unidentified does not imply that it would face an enforcement action for failing to register under Part 129.

Goldstein may not have provided the State Department with enough information to make an official and binding determination that any particular transaction of his would fall outside the definition of brokering. See 22 C.F.R. § 129.9. But taken as a whole, the State Department’s 2013 regulation explicitly removing the provision of legal advice from the definition of brokering activities, the Department’s letters to Goldstein, and its representations at oral argument demonstrate that, in the Department’s view, the firm is not subject to regulation as a broker based on the firm’s proposed activities. Therefore, because the firm alleges that it intends only to provide legal advice and denies that it will act as a finder (or collect a contingency fee) in the process, it has not shown that it faces a meaningful risk that the State Department will seek to enforce Part 129 against it, either by forcing it to register or by penalizing it for failure to register. Without any credible threat of enforcement, the firm has no injury to speak of that would afford it standing to seek to enjoin enforcement of that regulation in court.

III

The order of the district court dismissing the action for lack of subject-matter jurisdiction is affirmed on the ground that the plaintiff faces no credible threat .of enforcement and therefore lacks the injury-in-fact necessary for Article III standing.

So ordered.

      . The 2013 rule created this official advisory-opinion process. Prior to that rule taking effect, individuals could seek informal advisory opinions, but those opinions were “not binding on the Department of State.” 22 C.F.R. § 126.9(a) (2012).

      . The State Department has explained how this might work in practice: "[F]or example, if someone comes to an attorney and they want to sell controlled explosives, and they ask the attorney to draft a general sales contract, that would be legal advice, [and] it would not constitute brokering. But if the same person came to the attorney, asked them to draft a general sales contract and the attorney happens to also represent a buyer in Pakistan and knows the buyer would want to buy these controlled explosives, and so the attorney recommends that the contract be translated into Urdu knowing that this is going to be the only likely buyer in the area, then the attorney might have used non-legal knowledge and tried to steer the seller towards the particular buyer even though he was engaging in legal advice.” Oral Arg. Tr. 28:14-29:3.


author: KAREN LeCRAFT HENDERSON, Circuit Judge:

text:
    John DOE, also known as Kidane, Appellant v. The FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA, Appellee
    No. 16-7081
    United States Court of Appeals, District of Columbia Circuit.
    Argued February 2, 2017
    Decided March 14, 2017

      Richard M. Martinez argued the cause for the appellant. Samuel L. Walling, Nathan Cardozo, and Cindy Cohn were with him on brief. Scott A. Gilmore entered an appearance.
    David Kaye was on brief for the amici curiae United Nations Human Rights Experts in support of the plaintiff-appellant.
    Thomas R. Snider argued the cause for the appellee. Robert P. Charrow and Laura Metcoff Klaus were with him on brief.
    Before: HENDERSON and WILKINS, Circuit Judges, and SENTELLE, Senior Circuit Judge.
   KAREN LeCRAFT HENDERSON, Circuit Judge:

Plaintiff John Doe — proceeding pseudonymously as “Kidane” — ciaims he was tricked into downloading a computer program. The program allegedly enabled the Federal Democratic Republic of Ethiopia (Ethiopia) to spy on him from abroad. He wants to sue the Republic of Ethiopia. But foreign states are immune from suit unless an exception to the Foreign Sovereign Immunities Act (FSIA) applies. Ki-dane invokes the FSIA’s exception for noncommercial torts. We conclude his reliance is misplaced. The noncommercial-tort exception abrogates sovereign immunity for a tort occurring entirely in the United States. Kidane, by contrast, alleges a transnational tort. We therefore affirm the district court’s dismissal for lack of subject matter jurisdiction.

I. BACKGROUND

Now an American citizen, Kidane was born in Ethiopia. He obtained asylum in the United States in the early 1990s and has at all relevant times lived in Silver Spring, Maryland. There, he has remained active in the Ethiopian community and has maintained contacts who work to increase awareness of corruption and human rights issues in Ethiopia.

As alleged in the complaint, in late 2012 or early 2013, Kidane opened an attachment to an e-mail he received from an acquaintance. The e-mail had been forwarded and was allegedly sent originally by or on behalf of Ethiopia. Kidane’s complaint is silent as to whether the individual who sent Kidane the e-mail was located in the United States but the e-mail’s text suggests that individual was located in London. See Am. Compl. Ex. C (“You took your family to London.... ”). Once opened, the attachment allegedly infected Kidane’s computer with a “clandestine ... program! ] known as FinSpy.” Am. Compl. ¶ 4. FinSpy is “a system for monitoring and gathering information from electronic devices, including computers and mobile phones, without the knowledge of the device’s user.” Id. ¶ 6. It is “sold exclusively to government agencies.” Id. After installation on Kidane’s computer, FinSpy “began ... recording some, if not all, of the activities undertaken by users of the computer,” whether Kidane or his family members. Id. ¶ 5. It then allegedly communicated with a server in Ethiopia.

Kidane filed suit against Ethiopia, pressing two claims. First, Kidane sought relief under the Wiretap Act, 18 U.S.C. §§ 2510 et seq., which prohibits “any person [from] intentionally intercepting] ... any wire, oral, or electronic communication^]” id. § 2511(1). Second, Kidane alleged Ethiopia committed the Maryland common law tort of intrusion upon seclusion.

The district court dismissed Kidane’s lawsuit in its entirety. Doe v. Fed. Democratic Republic of Ethiopia, 189 F.Supp.3d 6, 28 (D.D.C. 2016). It first concluded that the relevant Wiretap Act provision could not be enforced via private lawsuit against a foreign government. Id. at 12-15. It next dismissed Kidane’s state-law claim for lack of subject matter jurisdiction. Id. at 15-28. The district court observed that the FSIA grants all foreign states immunity from suit in American courts, subject to limited enumerated exceptions. Id. at 16. Kidane invoked only one^ — the noncommercial-tort exception. Id. The district court found that exception inapplicable because the “entire tort” did not occur in the United States, as required. Id. at 18-25.

II. ANALYSIS

On appeal, Kidane challenges both grounds the district court used for dismissal. Each challenge triggers de novo review. Simon v. Republic of Hungary, 812 F.3d 127, 135 (D.C. Cir. 2016); El Paso Nat. Gas Co. v. United States, 750 F.3d 863, 874 (D.C. Cir. 2014). Unlike the district court, we do not reach the question whether the Wiretap Act authorizes a cause of action against Ethiopia for intercepting Kidane’s communications. We instead conclude that the FSIA withdraws jurisdiction in toto.

The FSIA is “the ‘sole basis for obtaining jurisdiction over a foreign state in our courts.’ ” Weinstein v. Islamic Republic of Iran, 831 F.3d 470, 478 (D.C. Cir. 2016) (quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434, 109 S.Ct. 683, 102 KEd.2d 818 (1989)). Unless an exception applies, “a foreign state shall be immune from the jurisdiction of the courts of the United States.” 28 U.S.C. § 1604. One of those exceptions is the noncommercial-tort exception. It abrogates immunity from an action involving “personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of [a] foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment[.]” Id. § 1605(a)(5). The phrase “occurring in the United States”' is no mere surplusage. “ ‘[T]he entire tort’— including not only the injury but also the act precipitating that injury — must occur in the United States.” Jerez v. Republic of Cuba, 775 F.3d 419, 424 (D.C. Cir. 2014) (quoting Asociacion de Reclamantes v. United Mexican States, 735 F.2d 1517, 1525 (D.C. Cir. 1984)).

In Jerez, the plaintiff (Jerez) alleged he was intentionally injected with hepatitis C while imprisoned in Cuba. See id. at 421. He sued Cuba, relying on the noncommercial-tort exception. Id. at 424. We found the exception inapplicable. As we explained, the alleged injection of hepatitis C occurred abroad and we rejected Jerez’s argument that a separate tort occurred each time the virus replicated in his body. Id. Replication showed only that Jerez suffered an “ongoing injury,” not that the tort’s precipitating act also occurred in the United States. Id. (emphasis omitted). Tsupport his replication theory, Jerez “anal-ogiz[ed] the defendants’ actions to a foreign agent’s delivery into the United States of an anthrax package or a bomb.” Id. That analogy was flawed, we explained, because “the defendants’ infliction of injury ... occurred entirely in Cuba, whereas the infliction of injury by the hypothetical anthrax package or bomb would occur entirely in the United States.” Id.

Kidane argues that Ethiopia’s tort is akin to the anthrax hypothetical. But the 'hypothetical was dictum and, of course, “[bjinding circuit law comes only from the holdings of a prior panel, not from its dicta.” Gersman v. Grp. Health Ass’n, 975 F.2d 886, 897 (D.C. Cir. 1992). And Jerez’s holding hardly helps Kidane. Jerez squarely held that “the entire tort ... must occur in the United States” for the noncommercial-tort exception to apply. 775 F.3d at 424 (emphasis added) (internal quotation marks omitted). Here, at least a portion of Ethiopia’s alleged tort occurred abroad.

Maryland’s intrusion-upon-seclusion tort shows why that is so. The tort covers “[o]ne who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, [making the intruder] subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person.” Bailer v. Erie Ins. Exch., 344 Md. 515, 687 A.2d 1375, 1380-81 (1997) (emphasis and internal quotation marks omitted) (quoting Restatement (Second) of Torts § 652B (1977)). There is thus no tort without intentional intrusion. But whether in London, Ethiopia or elsewhere, the tortious intent aimed at Kidane plainly lay abroad and the tortious acts of computer programming likewise occurred abroad. Moreover, Ethiopia’s placement of the FinSpy virus on Kidane’s computer, although completed in the United States when Kidane opened the infected e-mail attachment, began outside the United States. It thus cannot be said that the entire tort occurred in the United"States.

The two cases on which Kidane relies—Liu v. Republic of China, 892 F.2d 1419 (9th Cir. 1989), and Letelier v. Republic of Chile, 488 F.Supp. 665 (D.D.C. 1980)—are easily distinguished. In Liu, two gunmen allegedly acting at a Taiwanese admiral’s direction assassinated a man in California, 892 F.2d at 1421; in Letelier, Chilean government agents allegedly constructed, planted and detonated a car bomb in Washington, D.C., 488 F.Supp. at 665. In both, the courts determined they had jurisdiction under the FSIA’s noncommercial-tort exception to hear the victims’ survivors’ claims against the respective foreign sovereigns. Liu, 892 F.2d at 1425-26, 1431; Letelier, 488 F.Supp. at 673-74. Both involved actions “occurring in the United States” that were — without reference to any action undertaken abroad — tortious.

Ethiopia’s digital espionage is of a different character. Without the software’s initial dispatch or an intent to spy — integral aspects of the final tort which lay solely abroad — Ethiopia could not have intruded upon Kidane’s seclusion under Maryland law. Kidane’s Wiretap Act claim is similarly deficient. The Wiretap Act in pertinent part proscribes “intentional[ ] interceptions]” of “wire, oral, or electronic communication^].” 18 U.S.C. § 2511(l)(a). But, again, the “intent[ ],” id. and FinSpy’s initial deployment occurred outside the United States. The tort Kidane alleges thus did not occur “entire[ly]” in the United States, Jerez, 775 F.3d at 424 (internal quotation marks omitted); it is a transnational tort over which we lack subject matter jurisdiction.

Kidane regards this conclusion as inconsistent with the noncommercial-tort exception’s purpose and legislative history. He argues that, when the Congress codified the exception, it considered — but rejected — the approach of the European Convention on State Immunity. The European Convention abrogated sovereign immunity for certain torts if the facts underlying the torts occurred in the forum nation and if “the author of the injury or damage was present in that territory at the time.” European Convention on State Immunity art. 11, reprinted in Hearings on H.R. 11,315 Before the Subcomm. on Admin. Law & Governmental Relations of the H. Comm, on the Judiciary, 94th Cong. 39 (1976) (1976 Hearings). Kidane notes the absence of similar language in section 1605(a)(5). We think Kidane reads too much into the Congress’s silence. As the Supreme Court has explained, the “Congress’ primary purpose in enacting § 1605(a)(5) was to eliminate a foreign state’s immunity for traffic accidents and other torts committed in the United States, for which liability is imposed under domestic tort law.” Amerada Hess Shipping Corp., 488 U.S. at 439-40, 109 S.Ct. 683. It is thus unsurprising that transnational cyberespionage should lie beyond section 1605(a)(5)’s reach.

Kidane also directs us to the FSIA’s commercial activity exception to illuminate section 1605(a)(5)’s boundaries. The commercial activity exception authorizes claims “based upon a commercial activity carried on in the United States by [a] foreign state[.]” 28 U.S.C. § 1605(a)(2). He observes that the Supreme Court, interpreting this provision, found instructive the “point of contact” between the tort and its victim in determining where the tort occurred. OBB Personenverkehr AG v. Sachs, 577 U.S. -, 136 S.Ct. 390, 397, 193 L.Ed.2d 269 (2015) (internal quotation marks omitted). But Sachs underscores why the commercial activity exception is of limited usefulness here. There, the American plaintiff purchased a European rail travel pass from a Massachusetts travel agent. Id. at 393. When she used the pass to board the defendant Austrian state-owned railway’s train in Innsbruck, Austria, she fell onto the tracks, where the moving train crushed her legs. Id. She sued, invoking the FSIA’s commercial activity exception. Id. at 394. The Supreme Court concluded, however, that her lawsuit was not “based upon” the domestic sale of the rail pass. Id. at 393. It noted that “an action is based upon the particular conduct that constitutes the gravamen of the suit.” Id. at 396 (internal quotation marks omitted). It explained that “the conduct constituting the gravamen of [her] suit plainly occurred abroad.” Id. But Sachs interpreted the commercial activity exception. And unlike the commercial activity exception, the noncommercial-tort exception does not ask where the “gravamen” occurred, id.; instead, it asks where the “entire tort” occurred, Asociacion de Reclamantes, 735 F.2d at 1525 (emphasis added).

For the foregoing reasons, we affirm the district court’s dismissal of Kidane’s intrusion-upon-seclusion claim for lack of subject matter jurisdiction. Because the same reasoning applies with equal force to Ki-dane’s Wiretap Act claim, we affirm the dismissal of that claim as well.

So ordered.

      . Because, at this stage, Ethiopia has not disputed the factual basis for our jurisdiction but “challenges only the legal sufficiency of [Ki-dane's] jurisdictional allegations/' we “take [his] factual allegations as true and determine whether they bring the case within” the FSIA's noncommercial-tort exception. Phoenix Consulting Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C. Cir. 2000).

      . The district court reached this issue before addressing subject matter jurisdiction under the FSIA. Although recognizing that ordinarily it must address subject matter jurisdiction first, Doe, 189 F.Supp.3d at 11, it forestalled the jurisdictional inquiry based on Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). There, the High Court concluded that the statutory question was "logically antecedent” to Vermont's Eleventh Amendment immunity from suit and there existed "no realistic possibility” that answering the statutory question first “expand[ed] the Court’s power beyond the limits that the jurisdictional restriction has imposed.” Id. at 779, 120 S.Ct. 1858 (internal quotation marks omitted).

      . Ethiopia made several other arguments against the noncommercial-tort exception’s applicability but the district court rejected each. Doe, 189 F.Supp.3d at 17-18, 25-28. We need not address those arguments.

      . Even in such circumstances, the FSIA restores sovereign immunity from suits “based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion [has been] abused’’ and from suits "arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights[.]” 28 U.S.C. § 1605(a)(5)(A) — (B).

      . Jerez initially sued Cuba in Florida state court, where he obtained a default judgment. Jerez, 775 F.3d at 421. His case came to us through his efforts to execute the judgment on certain intellectual property. Id.

      . As the district court acknowledged, Doe, 189 F.Supp.3d at 24, and as Ethiopia observes, when the State Department Legal Adviser was asked whether there was any inconsistency between the European Convention and the FSIA, he responded that — subject to one discrepancy not relevant here — there generally was not. 1976 Hearings, at 37.

      . In so concluding, the Court quoted a letter written by Justice Oliver Wendell Holmes to then-Professor Felix Frankfurter opining that “the 'essentials' of a personal injury narrative will be found at the 'point of contact’ — the place where the boy got his fingers pinched.' " Sachs, 136 S.Ct. at 397. Kidane reads Sachs — particularly its reliance on the "point of contact’’ language — as confirming that “a tort occurs at the place where the injury was inflicted upon the plaintiff.” Appellant's Br. 14. We disagree with his reading.

      . We do not reach the applicability of the FSIA provisions governing discretionary functions or torts based upon misrepresentation or deceit. See 28 U.S.C. § 1605(a)(5)(A)-(B); see also supra n.4.