Ai Visualize, Inc. v. Nuance Communications, Inc.

97 F.4th 1371

• Court: Court of Appeals for the Federal Circuit
• Decided: April 4, 2024
• Docket: 22-2109
• Status: Published

Opinion

Case: 22-2109 Document: 61 Page: 1 Filed: 04/04/2024

United States Court of Appeals for the Federal Circuit ______________________

AI VISUALIZE, INC., Plaintiff-Appellant

v.

NUANCE COMMUNICATIONS, INC., MACH7 TECHNOLOGIES, INC., Defendants-Appellees ______________________

2022-2109 ______________________

Appeal from the United States District Court for the District of Delaware in No. 1:21-cv-01458-RGA, Judge Richard G. Andrews. ______________________

Decided: April 4, 2024 ______________________

RAJKUMAR VINNAKOTA, Cole Schotz P.C., Dallas, TX, argued for plaintiff-appellant. Also represented by TIMOTHY J.H. CRADDOCK, VISHAL H. PATEL.

ANISH R. DESAI, Weil, Gotshal & Manges LLP, New York, NY, argued for all defendants-appellees. Defendant- appellee Nuance Communications, Inc. also represented by DAVID JASON LENDER; AMANDA BRANCH, PRIYATA PATEL, Washington, DC; DAVID GREENBAUM, Greenbaum Law LLC, Englewood, NJ. Case: 22-2109 Document: 61 Page: 2 Filed: 04/04/2024

ALAN RICHARD SILVERSTEIN, Connolly Gallagher LLP, Wilmington, DE, for defendant-appellee Mach7 Technolo- gies, Inc. ______________________

Before MOORE, Chief Judge, REYNA and HUGHES, Circuit Judges. REYNA, Circuit Judge. AI Visualize, Inc. sued Nuance Communications, Inc. and Mach7 Technologies, Inc. in the District of Delaware for patent infringement. Nuance and Mach7 moved to dis- miss under Federal Rule of Civil Procedure 12(b)(6) for fail- ure to state a claim. They argued that the asserted patent claims were directed to patent-ineligible subject matter and therefore invalid under 35 U.S.C. § 101. The district court granted the motion, finding the asserted claims were directed to an abstract idea and failed to provide an in- ventive step that transformed that abstract idea into a pa- tent-eligible invention. The district court entered judgment and dismissed AI Visualize’s case. For the rea- sons below, we affirm. BACKGROUND A. The Asserted Patents The four patents at issue are U.S. Patent Nos. 8,701,167 (’167 patent), 9,106,609 (’609 patent), 9,438,667 (’667 patent), and 10,930,397 (’397 patent). They are part of the same patent family and share substantially the same specification. 1 The field of the asserted patents generally relates to visualization of medical scans. Each patent is titled “Method and system for fast access to advanced vis- ualization of medical scans using a dedicated web portal.”

1 We refer to the ’609 patent specification for all four asserted patents. Case: 22-2109 Document: 61 Page: 3 Filed: 04/04/2024

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According to the patents, medical imaging systems like magnetic resonance imaging (MRI) scans typically create a collection of two-dimensional cross-section images of a pa- tient’s body or organ. ’609 patent, 1:27–32. These images are often stored together at a centralized server as a three- dimensional collection of data representing the scanned area, referred to as a “volume visualization dataset” or “VVD”. Id. at 1:30–35. At the time of the invention, “[t]ech- nology exist[ed]” to use these VVDs “to present rich[] three- dimensional (3D) views from existing two-dimensional (2D) scans that may lead to better diagnosis and prognosis.” Id. at 1:22–25; see also id. at 1:35–46. But the inventors recognized complications with at- tempts to view portions of these large VVDs at a client com- puter. To look at a three-dimensional view, “either the user’s computer or a dedicated server need[ed] to be pow- erful enough to support [the] processing power and the 2D scans need[ed] to be directly available to the user’s com- puter via a high speed communication link.” Id. at 1:49–53. The patents thus explain that “[t]he present invention overcomes this limitation by teaching a method and system of a common and centralized infrastructure, for receiving, storing, processing and viewing large medical scans via a low-bandwidth web portal.” Id. at 1:58–62. They describe systems and methods for users to review three-dimensional (or higher dimension) “virtual views” of a VVD on a com- puter connected to the internet without having to transmit or locally store the entire VVD. Id. at 2:52–57. At issue in this appeal are claims 1, 6, 7, 9, 12, and 13 of the ’167 patent; claims 1, 4, 6–9, 19, 20, 22, 25, and 26 of the ’609 patent; claims 1–3, 8, 9, 11, 14, and 15 of the ’667 patent; and claims 1–3, 11–14, and 16–18 of the ’397 pa- tent. The parties agree that for purposes of a 35 U.S.C. § 101 analysis, these asserted claims can be sorted into three groups, with each group represented by one claim of the ’609 patent. See Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018) (holding that claims may be treated Case: 22-2109 Document: 61 Page: 4 Filed: 04/04/2024

as “representative” in a § 101 inquiry if a patentee makes no “meaningful argument for the distinctive significance of any claim limitations not found in the representative claim”). The claims in group 1 involve systems where a web ap- plication determines which frames of a virtual view, if any, are already stored locally on a user’s device; directs the server to create any necessary, additional frames for trans- mission to the user’s device; compiles at the user’s device the locally-stored and newly-received frames to create the desired virtual view; and displays the user’s requested vir- tual view. ’609 patent, claim 1. The parties agree that claim 1 of the ’609 patent is representative of the group 1 claims. 2 Claim 1 recites: 1. A system for viewing at a client device at a remote location a series of three-di- mensional virtual views over the Internet of a volume visualization dataset contained on at least one centralized database com- prising: at least one transmitter for accepting vol- ume visualization dataset from remote lo- cation and transmitting it securely to the centralized database; at least one central data storage medium containing the volume visualization da- taset; a plurality of servers in communication with the at least one centralized database

2 The group 1 claims are: claims 1, 4, and 6–9 of the ’609 patent; claim 1 of the ’167 patent; claims 1–3 of the ’667 patent; and claims 1–3, 11–14, and 16–18 of the ’397 patent. Case: 22-2109 Document: 61 Page: 5 Filed: 04/04/2024

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and capable of processing the volume visu- alization dataset to create virtual views based on client request; a resource manager device for load balanc- ing the plurality of servers; a security device controlling the plurality of communications between a client device, and the server; including resource manager and central storage medium; at least one physically secured site for housing the centralized database, plurality of servers, at least a resource manager, and at least a security device; a web application adapted to satisfy a user’s request for the three-dimensional virtual views by: a) accepting at a remote location at least one user request for a se- ries of virtual views of the volume visuali- zation dataset, the series of views comprising a plurality of separate view frames, the remote location having a local data storage medium for storing frames of views of the volume visualization dataset, b) determining if any frame of the re- quested views of the volume visualization dataset is stored on the local data storage medium, c) transmitting from the remote location to at least one of the servers a re- quest for any frame of the requested views not stored on the local data storage me- dium, d) at at least one of the servers, cre- ating the requested frames of the requested views from the volume visualization da- taset in the central storage medium, e) transmitting the created frames of the re- quested views from at least one of the Case: 22-2109 Document: 61 Page: 6 Filed: 04/04/2024

servers to the client device, f) receiving the requested views from the at least one server, and displaying to the user at the re- mote location the requested series of three- dimensional virtual views of the volume visualization dataset by sequentially dis- playing frames transmitted from at least one of the servers along with any frames of the requested series of views stored on the local data storage medium. Id. at claim 1. Claim 19 of the ’609 patent, a dependent claim that de- pends from claim 1, is representative of the group 2 claims. 3 The claims in group 2 involve the same core sys- tem as the group 1 claims. The group 2 claims further re- quire that if a virtual view has been previously requested by a user, it is assigned a “unique identifiable key.” Id. at 18:42–44. The web application compares the current user request for a virtual view to any previous user requests and determines whether any image frames with a correspond- ing unique identifiable key are already locally stored. Id. at 18:48–60. Claim 22 of the ’609 patent is representative of the group 3 claims. 4 Unlike the claims in groups 1 and 2, the claims in group 3 do not include the step of initially check- ing to see whether any frames for the user’s requested vir- tual view are stored locally. See generally id. at 19:26–51. The web application requests all the frames from the

3 The group 2 claims are: claims 19–20 of the ’609 patent; claims 6–7 of the ’167 patent; and claims 8–9 of the ’667 patent. 4 The group 3 claims are: claims 22, 25, and 26 of the ’609 patent; claims 9, 12, and 13 of the ’167 patent; and claims 11, 14, and 15 of the ’667 patent. Case: 22-2109 Document: 61 Page: 7 Filed: 04/04/2024

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centralized server. The server transmits lower-quality ver- sions of the frames for immediate viewing. It then trans- mits the higher-quality versions. B. Procedural History In October 2021, AI Visualize sued Appellees Nuance Communications, Inc. and Mach7 Technologies, Inc. (col- lectively, Nuance) in the District of Delaware for patent in- fringement. After Nuance moved to dismiss AI Visualize’s complaint for failure to state a claim, AI Visualize filed a first amended complaint. Nuance again moved to dismiss. AI Visualize, Inc. v. Nuance Commc’ns, Inc., 610 F. Supp. 3d 638, 640–41 (D. Del. 2022) (“Decision”). It argued that the amended complaint should be dismissed because the asserted claims were directed to patent-ineligible subject matter under 35 U.S.C. § 101. Id. In its decision regarding the motion, the district court first observed that “[n]either party has argued that the Amended Complaint provides any additional information relevant to the patent eligibility of the Asserted Claims and neither party asserts that claim construction is needed.” Id. at 644. The district court then reviewed the claims, ap- plying the two-step Alice inquiry, and concluded that all the asserted claims were patent-ineligible. See id. at 649. Turning to Alice step one, the district court concluded that all the asserted claims are directed to the abstract idea of “retrieving user-requested, remotely stored infor- mation.” See, e.g., id. at 646. The district court reviewed the specification and found that the asserted patents at- tempted to address prior art problems with transmitting large VVDs over a standard internet connection. Id. The district court stated that the focus of the claimed advance over the prior art is “selectively accessing user-requested data, remotely, that is stored in a centralized storage loca- tion.” Id. It rejected AI Visualize’s arguments that the claims are directed to improvements in computer function- ality. Id. Case: 22-2109 Document: 61 Page: 8 Filed: 04/04/2024

At Alice step two, the district court independently con- sidered each of the three representative claims. It con- cluded that no claim limitations transformed the representative claims into a patent-eligible applications of an abstract idea. For example, for the group 1 claims, the district court found that the “inventive component of Claim 1 is the ability to obtain virtual views of a VVD over a low bandwidth, high latency network.” Id. at 647 (inter- nal quotations omitted). It then stated that only one limi- tation in Claim 1 related to “achieving that stated goal,” and concluded that the limitation was “claimed function- ally, at a high level of generality,” such that it did not save the claims from abstraction. Id. at 647–48. It conducted a similar Alice step two inquiry for the group 2 and group 3 claims, and ultimately held all asserted claims patent-inel- igible under 35 U.S.C. § 101. See id. at 648–49. AI Visualize appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1). DISCUSSION We review the grant of a Rule 12(b)(6) motion to dis- miss under the law of the applicable regional circuit, in this case, the Third Circuit. Endo Pharms. Inc. v. Teva Pharms. USA, Inc., 919 F.3d 1347, 1352 (Fed. Cir. 2019). The Third Circuit reviews de novo a district court’s grant of a Rule 12(b)(6) motion to dismiss. Id. (citing Ballentine v. United States, 486 F.3d 806, 808 (3d Cir. 2007)). To survive a Rule 12(b)(6) motion, a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Section 101 of the Patent Act provides that: “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 therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101. But § 101 “contains an important implicit exception: Laws of nature, natural phenomena, and Case: 22-2109 Document: 61 Page: 9 Filed: 04/04/2024

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abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208, 216 (2014) (citations omit- ted). The Supreme Court has articulated a two-step test, commonly referred to as the “Alice” test, for examining whether a patent claims patent-ineligible subject matter. Id. at 217–18. Under step one of the Alice test, we review whether a claim is directed to a patent-ineligible concept like an abstract idea. Id. at 217. If the answer is no, then the inquiry ends. Id. But if the answer is yes, the inquiry proceeds to the second step. Id. At step two, we review whether the claim recites elements sufficient to transform it into a patent-eligible application. Id. at 217–18. We review § 101 patent eligibility under Federal Cir- cuit law. Smart Sys. Innovations, LLC v. Chi. Transit Auth., 873 F.3d 1364, 1367 (Fed. Cir. 2017). Eligibility is ultimately a question of law that may be based on underly- ing factual findings. Berkheimer, 881 F.3d at 1365. And it may be resolved on a Rule 12(b)(6) motion “where the un- disputed facts, considered under the standards required by that Rule, require a holding of ineligibility under the sub- stantive standards of law.” SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1166 (Fed. Cir. 2018). A. Alice Step One Under Alice step one, we consider whether the claims at issue are directed to patent-ineligible subject matter, here, an abstract idea. This “directed to” inquiry does more than “simply ask whether the claims involve a patent-inel- igible concept.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (emphasis in original). Instead, we must look to the character of the claims as a whole to determine whether they are “directed to” patent-ineligible subject matter. Id. We often conduct the Alice step one inquiry by examin- ing the “focus of the claimed advance over the prior art.” Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016); see also Enfish, 822 F.3d Case: 22-2109 Document: 61 Page: 10 Filed: 04/04/2024

at 1335. In the realm of computer-related technology, such as in this case, patent claims may be non-abstract at Alice step one if the focus of the claimed advance is on an im- provement in computer technologies, rather than the mere use of computers. Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016). The claims must “fo- cus on a specific means or method that improves the rele- vant technology.” McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016). We determine if the claim’s character as a whole is di- rected to ineligible subject matter by considering the claim limitations that are purported to describe the claimed ad- vance over the prior art. Free Stream Media Corp. v. Al- phonso Inc., 996 F.3d 1355, 1362 (Fed. Cir. 2021). We recognize the focus of the claims without characterizing the claims at too high of a level of generality, untethered from the claim language itself. Enfish, 822 F.3d at 1337. Fi- nally, we consider the claims in light of the specification but avoid importing concepts from the specification into the claims. ChargePoint, Inc. v. SemaConnect, Inc., 920 F.3d 759, 767, 769 (Fed. Cir. 2019); cf. Phillips v. AWH Corp., 415 F.3d 1303, 1323 (Fed. Cir. 2005). We agree with the district court that at Alice step one, all the asserted claims were directed to an abstract idea. See, e.g., Decision, 610 F. Supp. 3d at 646. We have ex- plained that the steps of obtaining, manipulating, and dis- playing data, particularly when claimed at a high level of generality, are abstract concepts. See, e.g., Elec. Power Grp., 830 F.3d at 1353–54 (collecting cases). Here, the claims in groups 1 and 2 recite a system that includes the functionally-oriented steps of: storing data (VVD) on a server, accepting user requests to view a portion of that data (virtual views), checking for the location of all data needed for the virtual view, “creating” image frames from any non-locally-stored virtual view data, transmitting all non-locally-stored image frames to the user, compiling all image frames, and sequentially displaying the image Case: 22-2109 Document: 61 Page: 11 Filed: 04/04/2024

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frames to the user. See ’609 patent, claim 1. The group 3 claims are similar. They involve transmitting two versions of all frames—initial, low-quality versions followed by higher-quality versions—from the server to the user. Id. at claim 22. In other words, the asserted claims are di- rected to converting data and using computers to collect, manipulate, and display the data. We reached a similar conclusion in Hawk Tech. Sys., LLC v. Castle Retail, LLC, 60 F.4th 1349 (Fed. Cir. 2023). Hawk considered patent claims involving “viewing multi- ple simultaneously displayed and stored video images on a remote viewing device of a video surveillance system.” Id. at 1352. The patent holder emphasized that the claims re- quired converting video data using certain parameters in such a manner that the data could be manipulated and dis- played to conserve bandwidth and preserve the data qual- ity. Id. at 1357. But “converting information from one format to another . . . is an abstract idea.” Id. AI Visualize argues that the claims are not directed to an abstract idea because the claims require the creation of “on the fly” virtual views at a client computer. See, e.g., Appellant Br. 28–29; Reply Br. 4. But the claim language makes clear that virtual view “creation” is achieved by the manipulation of a portion of the existing VVD. See, e.g., ’609 Patent, 17:25–27, 17:38–39. For example, Claim 1 of the ’609 patent requires “accepting at a remote location at least one user request for a series of virtual views of the volume visualization dataset” and “creating the requested frames of the requested views from the volume visualiza- tion dataset.” Id. (emphasis added). As in Hawk, this “cre- ation” of a virtual view from the existing VVD, recited in general terms, is abstract data manipulation. AI Visualize points to multiple passages of the specifi- cation to support its view that “creation” of virtual views provides a technical solution to a technical problem, includ- ing one passage that addresses dynamic and static virtual Case: 22-2109 Document: 61 Page: 12 Filed: 04/04/2024

views by describing how related image frames are selected from a VVD. See id. at 9:34–52. As noted, we refuse to import details from the specification if those details are themselves not claimed. ChargePoint, 920 F.3d at 769. There is no recitation in the claim about how to create frames or virtual views, much less in a manner that would meaningfully support a technical solution to a technical problem in the prior art. We conclude that the asserted claims are directed to an abstract idea. B. Alice Step Two AI Visualize argues that to the extent the claims are found to be patent-ineligible at Alice step one, the claims are made patent-eligible at Alice step two. At Alice step two, we consider the claim elements indi- vidually and as an ordered combination to assess whether they “transform the nature of the claim into a patent-eligi- ble application of the abstract idea.” Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1338 (Fed. Cir. 2017) (citation omitted). At this step we must ask: “[w]hat else is there in the claims before us?” Mayo Collaborative Servs. v. Prometheus Lab’ys, Inc., 566 U.S. 66, 78 (2012). To survive at Alice step two, a claim must recite something “significantly more” than an abstract idea itself. Alice, 573 U.S. at 217–18. A claim cannot rest on the patent-ineligible concept alone to transform the inven- tion into something significantly more than that concept. BSG Tech LLC v. Buyseasons, Inc., 899 F.3d 1281, 1290 (Fed. Cir. 2018). Nor can claim elements or combinations of claim elements that are routine, conventional, or well- known transform the claims. Id. at 1290–91. Although Alice step two involves a question of law, whether a claim limitation or combination of limitations is well-understood, routine, and conventional may involve an underlying factual question. Id. at 1290 (“Whether a Case: 22-2109 Document: 61 Page: 13 Filed: 04/04/2024

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combination of claim limitations supplies an inventive con- cept that renders a claim ‘significantly more’ than an ab- stract idea to which it is directed is a question of law. Underlying factual determinations may inform this legal determination.”). Thus, at the motion to dismiss stage, “pa- tentees who adequately allege their claims contain in- ventive concepts survive a § 101 eligibility analysis under Rule 12(b)(6).” Aatrix Software, Inc. v. Green Shades Soft- ware, Inc., 882 F.3d 1121, 1126–27 (Fed. Cir. 2018); see also Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1317–18 (Fed. Cir. 2019). Conclusory allegations, Simio, LLC v. FlexSim Software Prod., Inc., 983 F.3d 1353, 1365 (Fed. Cir. 2020), or those “wholly divorced” from the claims or the specification, Cellspin, 927 F.3d at 1317, cannot defeat a motion to dismiss. And a patentee that emphasizes a claim’s use of certain technology, for example, a general- purpose computer, fails at step two when the intrinsic rec- ord establishes that the technology is conventional or well- known in the art. See, e.g., Int’l Bus. Machs. Corp. v. Zillow Grp., Inc., 50 F.4th 1371, 1380 (Fed. Cir. 2022). Here, the district court observed that AI Visualize made no arguments regarding additional allegations in the amended complaint, nor presented any assertions that the construction of certain claim terms was relevant to the Al- ice inquiry. Decision, 610 F. Supp. 3d at 644. Based on its review of the intrinsic record and the allegations in the complaint, the district court ultimately concluded that each group of asserted claims involved nothing more than the abstract idea itself or conventional computer functions or components. Id. at 647–49. For example, for both group 2 and 3 claims, the district court determined the alleged in- ventive concepts in the claims were no more than the ab- stract ideas themselves. Id. at 648–49. It determined that nothing in the claim limitations transformed the abstract nature of the claims into patent-eligible subject matter. Id. at 647–49. We agree. Case: 22-2109 Document: 61 Page: 14 Filed: 04/04/2024

AI Visualize argues that the creation of virtual views sufficiently transforms the claims into patent-eligible sub- ject matter. See, e.g., Appellant Br. 43–45; Reply Br. 26. But as we noted above, the claimed step of creating a vir- tual view is itself an abstract idea. See Hawk, 60 F.4th at 1359. Moreover, the intrinsic record undermines AI Vis- ualize’s argument by showing that virtual views were known in the art. ’609 patent, 1:22–25. The shared speci- fication provides that technology existed at the time of the invention “to present richer three-dimensional (3D) views from existing two-dimensional (2D) scans that may lead to better diagnosis and prognosis.” Id. AI Visualize acknowl- edged this at oral argument. See, e.g., Oral Arg. 2:40–3:13. AI Visualize also argues that creation of virtual views “on demand” or in “real-time” in response to a user request transforms the claims into something “significantly more” than the abstract idea. See, e.g., Appellant Br. 43. We are not persuaded. In Affinity Labs, we found claims involving a “customized user interface” failed to recite an inventive concept. Affinity Labs, 838 F.3d at 1271–72. Without a “concrete application of the abstract idea of delivering con- tent,” the claims were not transformed into patent-eligible subject matter at Alice step two. Id. at 1272. Similarly in Electric Power Group, the claimed invention purported to pull information regarding power grid operations from many sources, process and analyze it, and display relevant data to a user “in real time”. Elec. Power Grp., 830 F.3d at 1356. Because the claims disclosed only “entirely conven- tional, generic technology,” they remained patent-ineligi- ble at Alice step two. Id. As in Affinity Labs and Electric Power, AI Visualize’s amended complaint has not made sufficient factual allegations to support that the claims in- volve unconventional technology or a concrete application of the abstract idea of virtual view “creation.” AI Visual- ize’s claim that the “virtual views” are created “on the fly,” without more, cannot support patent eligibility at Alice step two. Case: 22-2109 Document: 61 Page: 15 Filed: 04/04/2024

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AI Visualize’s amended complaint also failed to ade- quately allege an inventive concept in the ordered combi- nation of claim limitations. “[M]erely reciting an abstract idea performed on a set of generic computer components, as [the claims] do[] here, would ‘not contain an inventive concept.’” Two-Way Media, 874 F.3d at 1339 (quoting BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016)). We therefore agree with the district court that AI Visualize’s claims are not saved at Alice step two. We hold that the asserted claims are patent ineligible because they are directed to an abstract idea and fail to transform that abstract idea into patent-eligible subject matter. CONCLUSION We have considered AI Visualize’s other arguments and find them unpersuasive. For the above reasons, we hold that the asserted claims are directed to patent-ineligi- ble subject matter. We thus affirm the district court’s dis- missal under Rule 12(b)(6) based on subject matter ineligibility under § 101. AFFIRMED COSTS No costs.