CyberSource: Machines Executing Processes and the Computer-Readable Medium

Since the Bilski v. Kappos decision, 130 S. Ct. 3218 (2010), practitioners in the software arts have debated whether the inclusion of a computer or computer-readable medium in claims that include process steps would render claims patentable. In CyberSource v. Retail Decisions, No. 2009-1358 (Aug. 16, 2011), a panel of the Federal Circuit affirmed a district court's summary judgment ruling that the asserted patent claims were invalid under 35 U.S.C. ' 101, and held that purely mental processes are unpatentable abstract ideas. The court rejected “CyberSource's main argument ' that coupling the unpatentable mental process ' with a manufacture or machine renders it patent-eligible.” Specifically, the court decided that merely limiting an unpatentable mental process to a computer-readable medium for execution on a processor, in a so-called Beauregard claim, did not satisfy ' 101.

History

Under ' 101, a patent may be granted for “any new and useful process, machine, manufacture, or composition of matter.” However, patentable subject matter does not include “laws of nature, physical phenomena, and abstract ideas.” Diamond v. Chakrabarty, 447 U.S. 303 (1980). Process claims in particular have been the most problematic category of art under ' 101 and have been the focus of much of the case law regarding patentable subject matter.

In Bilski, the Supreme Court's most recent decision regarding ' 101, the Court found that patent claims directed to a business method for hedging risk were invalid on the grounds that they were “abstract ideas.” The Bilski Court analyzed the machine or transformation (“MoT”) test stating that the test was a “useful and important clue” to determining patentable subject matter, but holding that it was not the exclusive test for determining subject matter patentability. While the Supreme Court affirmed the Federal Circuit's application of the transformation prong of the MoT test in determining that Bilski's claims were unpatentable, the machine prong of the test was only briefly analyzed with respect to the claims because Bilski admitted that the process was not limited to an apparatus or machine.

The CyberSource Decision

However, in the Federal Circuit's recent CyberSource decision, the claims recited machines and articles of manufacture, so a detailed application of the machine prong of the MoT test to the claims was addressed. The Federal Circuit's analysis began with process claim 3, which it concluded did not include a machine or article of manufacture.

Claim 3

Claim 3 is a method for detecting credit card fraud and 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 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 Federal Circuit concluded that because “no particular machine was required” by claim 3, the claim failed the machine prong of the MoT test. Specifically, the court ruled that using the Internet only as a source for data was not enough to satisfy the machine prong of the test. The court also ruled that the transformation prong of the test was not met because the claim was a “mere collection and organization of data regarding credit card numbers and Internet addresses.”

Purely Mental Process

As required by Bilski, the court did not end its analysis of claim 3 after applying the MoT test; it also concluded claim 3 was directed toward an “abstract idea” since the claim was a purely “mental process.” In reaching this conclusion, the Federal Circuit compared claim 3 to the claims at issue in Gottschalk v. Benson, 409 U.S. 63 (1972), where converting binary coded decimal numbers into binary numbers through a mathematical algorithm using computer registers was determined to be unpatentable subject matter because the method could be performed mentally. The court also compared claim 3 to the claims at issue in Parker v. Flook, 437 U.S. 584 (1978), in which the claimed alarm limits for triggering a warning system could “be made [using a] pencil and paper” and were therefore determined to be unpatentable mental processes.

The court then analyzed each step of claim 3, deciding that each step could be performed in the human mind. The court thus concluded that claim 3 was unpatentable and that it embodied the “basic tools of scientific and technological work” that are reserved exclusively for no man.

Claim 2

The Federal Circuit then analyzed claim 2, a Beauregard claim of a computer-readable medium including instructions for executing the method steps set forth in claim 3 on a computer. CyberSource argued that the computer-readable medium was an article of manufacture, not a process, and could therefore not possibly fall within the exceptions to patentable subject matter for “laws of nature, physical phenomena, [or] abstract ideas.” However, the court compared claim 2 to the claims at issue in Abele, 684 F.2d 902 (CCPA 1982), which analyzed an apparatus for displaying data including the method steps of calculating the difference between two numbers and displaying the result. In Abele, the CCPA treated the apparatus claim as a process for patentability determination under ' 101 because the apparatus was “broad” and “functionally defined.” The Federal Circuit concluded that CyberSource's claim 2 was similarly broad and not drawn to a specific computer-readable medium but rather to an underlying method of credit card fraud detection that could be “performed entirely in the human mind.” Therefore, claim 2 was determined not to be an article of manufacture and was analyzed as a process, and the MoT test was applied.

The court first determined that the transformation prong of the test was not satisfied for the same reasons given for claim 3. Then, the machine prong of the MoT test was determined not to have been satisfied. The court stated that the use of the machine in the method “must impose meaningful limits on the claim's scope” by playing a significant part in permitting the method to be performed. The court ruled that claiming a software implementation of a “purely mental process,” that can be performed without a computer, did not impose a meaningful limit on the claim scope.

The court again presented the example of the claim at issue in Gottschalk to illustrate a “purely mental process.” Despite the fact that some of the claims were limited to the use of computer shift registers, the claims in Gottschalk were found unpatentable because the process could be performed mentally.

The court then contrasted Gottschalk with SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319 (Fed. Cir. 2010), where a method for calculating position using GPS was found to be patentable. The machines in SiRF were “meaningful limits” because a processor was required to perform the calculations that were too complicated for the human mind and a GPS receiver was essential to gather data used by the processor. The court further contrasted Research Corp. Techs. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010) to CyberSource, in which claims recited the rendering of a halftone image of a digital image that could not be performed entirely in a human's mind.

Considerations for Claim Drafting

In light of recent case law, practitioners claiming information'technology-based machines or articles of manufacture related to performing a process should consider including specific components, as opposed to incidental components, in the claims. Components that are required by the process increase the likelihood of patentablity under ' 101, as opposed to components that are merely required by or recited in the claims but that are not otherwise necessary to perform the process. For example, data-gathering steps performed by a GPS receiver are more likely to be patentable than simply collecting position data. Similarly, data gathering and calculations that require the use of a computer and are not capable of being performed mentally should contribute toward patentability. A computer recited in the claim should not merely be a means to rapidly execute methods that can be performed mentally. However, practitioners should also note that the Federal Circuit cautioned against taking the mental process analysis too far and stated that there was nothing wrong with methods that recite mental method steps as a part of a process containing non-mental steps.

Practitioners claiming a method may similarly satisfy the machine prong of the MoT test by including steps that require the use of specific machines or components recited in the claims. Components or machines required by the method may be, for example, associated with data gathering, processing of information, or outputting of data. The components should not be incidental to the process steps they perform.

A final consideration for practitioners is to avoid writing process claims that are so broad as to pre-empt all uses of the process, including in the human mind. The Federal Circuit, in analyzing CyberSource, characterized the third step of claim 3 as “so broadly worded that it encompasses literally any method for detecting fraud based on the gathered transaction and internet addresses.” According to Bilski, a claim that “preempt[ed] any and every possible way of performing the steps of the [claimed process], by human or by any kind of machine or by any combination thereof,” was therefore an unpatentable “abstract idea.”

Brian Avery is an associate at Pearne & Gordon LLP, practicing in the Electrical department.

Since the Bilski v. Kappos decision, 130 S. Ct. 3218 (2010), practitioners in the software arts have debated whether the inclusion of a computer or computer-readable medium in claims that include process steps would render claims patentable. In CyberSource v. Retail Decisions, No. 2009-1358 (Aug. 16, 2011), a panel of the Federal Circuit affirmed a district court's summary judgment ruling that the asserted patent claims were invalid under 35 U.S.C. ' 101, and held that purely mental processes are unpatentable abstract ideas. The court rejected “CyberSource's main argument ' that coupling the unpatentable mental process ' with a manufacture or machine renders it patent-eligible.” Specifically, the court decided that merely limiting an unpatentable mental process to a computer-readable medium for execution on a processor, in a so-called Beauregard claim, did not satisfy ' 101.

History

Under ' 101, a patent may be granted for “any new and useful process, machine, manufacture, or composition of matter.” However, patentable subject matter does not include “laws of nature, physical phenomena, and abstract ideas.” Diamond v. Chakrabarty , 447 U.S. 303 (1980). Process claims in particular have been the most problematic category of art under ' 101 and have been the focus of much of the case law regarding patentable subject matter.

In Bilski, the Supreme Court's most recent decision regarding ' 101, the Court found that patent claims directed to a business method for hedging risk were invalid on the grounds that they were “abstract ideas.” The Bilski Court analyzed the machine or transformation (“MoT”) test stating that the test was a “useful and important clue” to determining patentable subject matter, but holding that it was not the exclusive test for determining subject matter patentability. While the Supreme Court affirmed the Federal Circuit's application of the transformation prong of the MoT test in determining that Bilski's claims were unpatentable, the machine prong of the test was only briefly analyzed with respect to the claims because Bilski admitted that the process was not limited to an apparatus or machine.

The CyberSource Decision

However, in the Federal Circuit's recent CyberSource decision, the claims recited machines and articles of manufacture, so a detailed application of the machine prong of the MoT test to the claims was addressed. The Federal Circuit's analysis began with process claim 3, which it concluded did not include a machine or article of manufacture.

Claim 3

Claim 3 is a method for detecting credit card fraud and 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 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 Federal Circuit concluded that because “no particular machine was required” by claim 3, the claim failed the machine prong of the MoT test. Specifically, the court ruled that using the Internet only as a source for data was not enough to satisfy the machine prong of the test. The court also ruled that the transformation prong of the test was not met because the claim was a “mere collection and organization of data regarding credit card numbers and Internet addresses.”

Purely Mental Process

As required by Bilski , the court did not end its analysis of claim 3 after applying the MoT test; it also concluded claim 3 was directed toward an “abstract idea” since the claim was a purely “mental process.” In reaching this conclusion, the Federal Circuit compared claim 3 to the claims at issue in Gottschalk v. Benson , 409 U.S. 63 (1972), where converting binary coded decimal numbers into binary numbers through a mathematical algorithm using computer registers was determined to be unpatentable subject matter because the method could be performed mentally. The court also compared claim 3 to the claims at issue in Parker v. Flook , 437 U.S. 584 (1978), in which the claimed alarm limits for triggering a warning system could “be made [using a] pencil and paper” and were therefore determined to be unpatentable mental processes.

The court then analyzed each step of claim 3, deciding that each step could be performed in the human mind. The court thus concluded that claim 3 was unpatentable and that it embodied the “basic tools of scientific and technological work” that are reserved exclusively for no man.

Claim 2

The Federal Circuit then analyzed claim 2, a Beauregard claim of a computer-readable medium including instructions for executing the method steps set forth in claim 3 on a computer. CyberSource argued that the computer-readable medium was an article of manufacture, not a process, and could therefore not possibly fall within the exceptions to patentable subject matter for “laws of nature, physical phenomena, [or] abstract ideas.” However, the court compared claim 2 to the claims at issue in Abele, 684 F.2d 902 (CCPA 1982), which analyzed an apparatus for displaying data including the method steps of calculating the difference between two numbers and displaying the result. In Abele, the CCPA treated the apparatus claim as a process for patentability determination under ' 101 because the apparatus was “broad” and “functionally defined.” The Federal Circuit concluded that CyberSource's claim 2 was similarly broad and not drawn to a specific computer-readable medium but rather to an underlying method of credit card fraud detection that could be “performed entirely in the human mind.” Therefore, claim 2 was determined not to be an article of manufacture and was analyzed as a process, and the MoT test was applied.

The court first determined that the transformation prong of the test was not satisfied for the same reasons given for claim 3. Then, the machine prong of the MoT test was determined not to have been satisfied. The court stated that the use of the machine in the method “must impose meaningful limits on the claim's scope” by playing a significant part in permitting the method to be performed. The court ruled that claiming a software implementation of a “purely mental process,” that can be performed without a computer, did not impose a meaningful limit on the claim scope.

The court again presented the example of the claim at issue in Gottschalk to illustrate a “purely mental process.” Despite the fact that some of the claims were limited to the use of computer shift registers, the claims in Gottschalk were found unpatentable because the process could be performed mentally.

The court then contrasted Gottschalk with SiRF Tech., Inc. v. Int'l Trade Comm'n , 601 F.3d 1319 (Fed. Cir. 2010), where a method for calculating position using GPS was found to be patentable. The machines in SiRF were “meaningful limits” because a processor was required to perform the calculations that were too complicated for the human mind and a GPS receiver was essential to gather data used by the processor. The court further contrasted Research Corp. Techs. v. Microsoft Corp. , 627 F.3d 859 (Fed. Cir. 2010) to CyberSource, in which claims recited the rendering of a halftone image of a digital image that could not be performed entirely in a human's mind.

Considerations for Claim Drafting

In light of recent case law, practitioners claiming information'technology-based machines or articles of manufacture related to performing a process should consider including specific components, as opposed to incidental components, in the claims. Components that are required by the process increase the likelihood of patentablity under ' 101, as opposed to components that are merely required by or recited in the claims but that are not otherwise necessary to perform the process. For example, data-gathering steps performed by a GPS receiver are more likely to be patentable than simply collecting position data. Similarly, data gathering and calculations that require the use of a computer and are not capable of being performed mentally should contribute toward patentability. A computer recited in the claim should not merely be a means to rapidly execute methods that can be performed mentally. However, practitioners should also note that the Federal Circuit cautioned against taking the mental process analysis too far and stated that there was nothing wrong with methods that recite mental method steps as a part of a process containing non-mental steps.

Practitioners claiming a method may similarly satisfy the machine prong of the MoT test by including steps that require the use of specific machines or components recited in the claims. Components or machines required by the method may be, for example, associated with data gathering, processing of information, or outputting of data. The components should not be incidental to the process steps they perform.

A final consideration for practitioners is to avoid writing process claims that are so broad as to pre-empt all uses of the process, including in the human mind. The Federal Circuit, in analyzing CyberSource, characterized the third step of claim 3 as “so broadly worded that it encompasses literally any method for detecting fraud based on the gathered transaction and internet addresses.” According to Bilski, a claim that “preempt[ed] any and every possible way of performing the steps of the [claimed process], by human or by any kind of machine or by any combination thereof,” was therefore an unpatentable “abstract idea.”

Brian Avery is an associate at Pearne & Gordon LLP, practicing in the Electrical department.