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In CyberSource Corp. v. Retail Decisions, Inc., No.
2009-1358 (Fed. Cir. Aug. 16, 2011), the Federal Circuit affirmed
the Northern District of California's grant of summary judgment
of invalidity for two reexamined claims that are directed to
detecting credit card fraud over the Internet. One claim recites a
"method for verifying the validity of a credit card
transaction over the Internet," and includes steps such as
"obtaining information about other transactions that have
utilized an Internet address that is identified with the credit
card transaction," and "constructing" and
"using" a map of credit card numbers based upon other
transactions to determine if the transaction is valid.
The Federal Circuit held that the "mere collection and
organization of data regarding credit card numbers and Internet
addresses is insufficient to meet the transformation prong ... and
the plain language ... does not require the method to be performed
by a particular machine, or even a machine at all." The
Federal Circuit reiterated that "[data-gathering] step[s]
cannot make an otherwise nonstatutory claim statutory."
Further, aside from the machine-or-transformation test, which is
not the sole test for patent eligibility, this claim also failed to
recite eligible subject matter because it was drawn to an
unpatentable mental process. Obtaining information about an
Internet address can be done by reading records in an existing
database, and the map appears to be just a list of credit card
transactions, so each step can be performed in the human mind.
The other claim at issue was a Beauregard claim, which was
directed to a computer readable medium containing program
instructions for executing the method of the claim discussed above.
The patentee argued that this claim is a manufacture, rather than a
process under section 101. The Federal Circuit disagreed, and
stated that "regardless of the statutory category ... a
claim's language is crafted to literally invoke, we look to the
underlying invention for patent-eligibility purposes." Here,
the claim was for a method of detecting credit card fraud, not a
manufacture for storing computer-readable information. Programming
a general purpose computer to perform an algorithm creates a new
machine -- a special purpose computer programmed to perform
particular functions. But simply reciting the use of a computer to
execute an algorithm that can be performed entirely in the human
mind does not render eligibility. So despite the Beauregard format,
this claim was treated as a process claim. The use of a machine
must impose meaningful limits on the claim's scope and not be
incidental to performing a mental process.
Because this case closely follows the guidelines set forth in
Bilski v. Kappos, it is unlikely that the U.S. Patent
& Trademark Office will change their approach to examination.
When relying on the machine prong of the machine-or-transformation
test, however, it may be helpful to draft method claims to more
explicitly recite the use of the machine in the steps. Had
CyberSource's claims recited how the Internet address was
obtained using a computer or how the Internet was involved in the
method, then the outcome might have been different.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Supreme Court in New York County recently dismissed a $20 million suit in a sanctioning order in response to the Plaintiff’s destruction of electronically stored information ("ESI").
