Last week in Cybersource Corp. v. Retail Decisions, Inc., the Federal Circuit panel of Judges Bryson, Dyk, and Prost overruled a large amount of precedent in holding that claims to computer-readable media are directed to non-patentable subject matter if the media contain code for methods that themselves are non-patentable subject matter.
The patent-at-issue in the case was directed to a ”method and system for detecting fraud in a credit card transaction between [a] consumer and a merchant over the Internet.” The district court had granted summary judgment that both claims-at-issue in the case were invalid as directed to non-patentable subject matter.
Claim 3 of the patent was directed to the method:
3. A method for verifying the validity of a credit card transaction over the Internet comprising the 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 transactions and;
c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.
In the opinion by Judge Dyk, the Federal Circuit agreed with the district court that the method does not meet the machine-or-transformation test. The patentee argued that the Internet constitutes a machine for purposes of the test. The court held, however, that the Internet does not perform the step of detecting fraud, but is merely the source of the data.
The court held that the claim was directed to an unpatentable “mental process.” All of the steps can be performed by the human mind or by a human with a pencil and paper, as the claim is not limited to a particular algorithm. Step (c) of the claim is “so broadly worded that it encompasses literally any method for detecting fraud based on the gathered transaction and Internet address data.”
Such a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101.
Computer-Readable Media Claim
The court next turned to claim 2, a Beauregard claim, directed to a computer readable medium that includes program instructions for performing a particular method. Such claims have been considered patentable subject matter since at least 1995 when the Federal Circuit issued its opinion In re Beauregard.
2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant 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, 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,
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 transactions; and
[c] utilizing the map of credit card numbers to determine if the credit card transaction is valid.
The court characterized the claim as “nothing more than a computer readable medium containing program instructions for executing the method of claim 3.” Within the parlance of § 101 of the Patent Act, claim 2 is directed to a “manufacture” rather than a “process.” The court was not so moved.
Regardless of what statutory category (“process, machine, manufacture, or composition of matter,” 35 U.S.C. § 101) a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information.
Incredibly, the court therefore chose to analyze claim 2 as a process claim instead of a manufacture claim. The court held that the “computer readable medium” limitation was merely incidental to the claimed process and does not impart any patentable limitation to the claim. The court attempted to distinguish several recent cases that had held otherwise on the basis that the processes involved steps that could not be performed entirely within the human mind. Those methods were apparently more complex than the process claimed in Cybersource.
On the computer-readable media claim, the Federal Circuit overruled a great deal of precedent and is in conflict with a great deal more, including some that it attempted to distinguish. The opinion calls into question literally tens of thousands of issued patents that were patentable under prior court precedent. Some are even suggesting that this case could have implications for further review of Myriad.
Hopefully, the court will review this case en banc, as it is simply too sweeping a reversal of settled law to permit repudiation by a panel of the court.