CyberSource v. Retails Decisions: A Computer-Readable Medium cannot make an Abstract Idea Patentable

My thanks to Greg Stark, Schwegman, Lundberg & Woessner P.A., for this brief of the Cybersource decision.

From Greg:

The Federal Circuit put a warning shot across the bow of patent attorneys that focus on patenting software related inventions. In the case of Cybersource Corp v. Retail Decisions, Inc. the Federal Circuit held that a computer-readable medium claim (Beauregard claim) that merely recites an unpatentable method is also non-statutory subject matter. In other words, the Federal Circuit held that merely putting method steps on a computer-readable medium (CRM) cannot make the method statutory subject matter.

The method claim found unpatentable recites:

3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:
a) obtaining information about other transac-tions that have utilized an Internet address that is identified with the [ ] credit card transaction;
b) constructing a map of credit card numbers based upon the other transactions and;
c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.

The unpatentable computer readable medium claim read as follows:

program instructions for detecting fraud in a credit card transaction between a consumer and a mer-chant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:
a) obtaining credit card information relating to the transactions from the consumer; and
b) verifying the credit card information based upon values of plurality of parameters, incombination with information that identi-fies the consumer, and that may provide an indication whether the credit card transac-tion is fraudulent,
wherein each value among the plurality of pa-rameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the mer-chant with a quantifiable indication of whether the credit card transaction is fraudulent,
wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;
[a] obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;
[b] constructing a map of credit card numbers based upon the other trans-actions; and
[c] utilizing the map of credit card num-bers to determine if the credit card transaction is valid.

The Federal Circuit analogized this case to In re Abele to support disposing of the CRM claim as non-statutory subject matter. The court states that “[r]egardless of what statutory category a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes.” Thus, the Federal Circuit considered this CRM claim to be nothing more than a claim to a process, which they considered analogous to the method claim that was already determined to be unpatentable subject matter.

What about the fact that operations stored on a CRM can only be executed on a computer, one might ask. The opinion does not directly address this, but does make the following related arguments. The first concerning related argument is stated as, “Cybersource has not met its burden to demonstrate that claim 2 is ‘truly drawn to a specific’ computer readable medium, rather than to the underlying method of credit card fraud detection.” What is a specific computer readable medium? At least in theory, any CRM with unique instructions stored on it would have been considered a “specific computer readable medium,” at least prior to this opinion.  Judge Dyk continues with the following statement regarding the CRM claim, “the incidental use of a computer to perform the mental process of claim 3 does not impose a sufficiently meaningful limit on the claim’s scope.” While it is undeniable that the claims at issue in this matter are broad, reciting operations in a CRM format means that all of the operations must be performed by a computer. The fact that the operations must be performed on a computer seems to make it more than “incidental use” of a computer.

It will be interesting to watch this case to see if the patent owner requests a rehearing en banc. Unfortunately, despite the opinion’s statement that “it is clear from the emphasized text that claim 2 recites nothing more than a computer readable medium containing program instructions for executing the method of claim 3,” the CRM actually contains at least one additional element. The additional recitation in the CRM claim reads as follows:

verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent,

wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent,…

Interestingly, at least the highlighted portion of the additional recitation in the CRM appears to be claiming a tangible result that would be produced by a computer performing these operations (e.g., scoring a transaction – quantifiable indication). The fact that this panel of the Federal Circuit appears to ignore this portion of the CRM claim provides any future panel an easy out for overturning this decision. Because the CRM claim does not literally recite only the unpatentable method steps, this case is unlikely to provide any clear guidance to the patent community.

Obviously, this decision from the Federal Circuit is concerning for patent attorney’s attempting to draft valid claims to software implemented inventions. The decision highlights the need to include independent claims from as many different statutory classes as possible (e.g., method, system, and CRM). Additionally, the decision emphasizes the importance of drafting method claims that recite statutory subject matter (ideally methods that satisfy the machine or transformation test). At a minimum, the Federal Circuit has made the difficult job of claiming software implemented inventions more difficult and less predictable.

ttp://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1358.pdf

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