- Unanimous Cybersource majority finds software method that can be performed in the human mind, or by a human using a pen and paper and its Beauregard claim counterpart unpatentable
On August 16, 2011, the Federal Circuit rendered its decision in Cybersource v. Retail Decisions which provides needed guidance on how to determine whether claims are subject matter patentable under 35 U.S.C. 101. In Cybersource, the Federal Circuit was asked to decide whether a method and a Beauregard claim directed to detecting credit card fraud which utilizes information relating credit card transactions to particular “Internet addresses” was subject matter patentable. In a unanimous decision, the Court affirmed the lower court in finding claims 2 and 3 of the 6,029,154 patent invalid under 35 USC 101 for failing to recite patent-eligible subject matter.
Following an unremarkable machine-or-transformation test analysis, the Cybersource Court went on to analyze the claims in what may be the real take-away from this decision – namely, an analysis of claims for subject matter patentability using the model provided by the Bilski Supreme Court. That model involves defining the patentability boundary line for these claims beyond which claims of this type preempt a fundamental principle and within which these claims may be patentable subject matter. The court defined that boundary line with these claims by the question “Can it be performed in the human mind, or by a human using a pen and paper?”
In holding claim 3 to fall outside the patentability boundary line and so to preempt an abstract idea, the Court explained that “[a]ll of claim 3’s method steps can be performed in the human mind, or by a human using a pen and paper. Claim 3 does not limit its scope to any particular fraud detection algorithm, and no algorithms are disclosed in the ’154 patent’s specification. Rather, the broad scope of claim 3 extends to essentially any method of detecting credit card fraud based on information relating past transactions to a particular “Internet address,” even methods that can be performed in the human mind.” Slip Op. 12.
In holding the Beauregard claim 2 to be unpatentable, the court explained that the claim recites nothing more than a computer readable medium containing program instructions for executing the method of claim 3. Slip Op. 16 The method underlying claim 2 being clearly the same method of fraud detection recited in claim 3, the Court held claim 2 to be likewise invalid as unpatentable subject matter.
The court was unpersuaded by the argument that the Beauregard claim was a 35 U.S.C. §101 “machine” and not a “process” on which Bilski was decided. The court deemed the Beauregard claim ultimately to be a claim on a process and the recited computer readable medium an insignificant post-solution activity. Slip Op. 17, 18. “Here, 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. Slip 19 In so holding, the court appears to be heeding the Bilski Supreme Court caveat that “[t]o hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection”. For more on the likely spill-over effects of Bilski into categories of subject matter other than a “process”, read Juhasz White Paper – Bilski and Software.
The Federal Circuit seems intent on adhering to its “functional and palpable test”, a test that was articulated in Research Tech for use in determining subject matter patentability questions. The Court in a contemporaneous case Classen made this crystal clear when it stated that “[i]f the specified method is “functional and palpable, the claims are drawn to statutory subject matter.” Classen, Slip Op. 17 But by deciding the software claims based on whether the steps of the software can be performed in the human mind, or by a human using a pen and paper and not on whether the software method was “functional and palpable”, the Cybersource Court may be indicating its own concern about the subjectivity of the “functional and palpable test” for use as a yardstick for measuring subject matter patentability questions. In our Juhasz Burge PC Blog on Research Tech, we voiced the same concern. There we said that that the “functional and palpable” standard in defining whether a claim preempts a fundamental idea (“palpable” is defined by Merriam-Webster dictionary to mean “capable of being touched or felt”) provides little guidance on determining the preemption issue and is reminiscent of the phrase made famous by Justice Potter Stewart in the obscenity case of Jacobellis v. Ohio that “I know it when I see it”. By analyzing these software claims in this way, Cybersource may be signaling the morphing of the very subjective “functional and palpable test” into arguably a more objective standard of “can it be performed in the human mind, or by a human using a pen and paper test”.
Still, Cybersource begs the question of just how many calculations must the claim perform before it is deemed to contain patentable subject matter because it cannot be “performed in the human mind, or by a human using a pen and paper”. Thus, Cybersource is likely to go down only as an important next step in the evolution of jurisprudence in this area toward a test that can be more objectively applied and lead to more consistent results.
At Juhasz Burge PC, we have suggested in the past that the test for accurately defining the boundary line beyond which a business, software, or diagnostic method preempts a fundamental idea may lie in whether the method provides a physical or virtual link to something real. There must be a physical or virtual link to a physical or tangible object. That is, a real or tangible object must be manipulated by data as in Diehr. Or data representing a real or tangible object must be manipulated as in the Fifth claim of Morse. Both Cybersource and Classen cases appear to support this view that the link of data to, that is, the manipulation of, something “real” may provide the clue to the patent eligibility of a business, software, or diagnostic method. For more on “virtual links” and “physical links” and their use, go to Physical and Virtual Links.
Cybersource is a must read for practitioners dealing with Bilski issues. For a more comprehensive discussion of Cybersource and take-aways including suggested tips for use in drafting diagnostic method claims, go to the September 2011 Juhasz Burge PC Advisory.
The Juhasz Burge PC Firm can help you to better understand the effect of Cybersource on your software patents. For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Burge PC Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Burge PC, the firm committed to Guiding Your Patent Beyond The Horizon℠.