765 F.3d 1350 (Fed. Cir. 2014), 2013-1575, buySAFE, Inc. v. Google, Inc.

Docket Nº:2013-1575
Citation:765 F.3d 1350
Opinion Judge:Taranto, Circuit Judge.
Party Name:BUYSAFE, INC., Plaintiff-Appellant, v. GOOGLE, INC., Defendant-Appellee
Attorney:STEPHEN M. HANKINS, Schiff Hardin LLP, of San Francisco, California, argued for plaintiff-appellant. With him on the brief was ALISON L. MADDEFORD. Of counsel on the brief were BRIAN D. SIFF and JAMES E. HANFT, of New York, New York, and DONALD E. STOUT, Antonelli, Terry, Stout & Kraus, LLP, of A...
Judge Panel:Before TARANTO and HUGHES, Circuit Judges.[*]
Case Date:September 03, 2014
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
FREE EXCERPT

Page 1350

765 F.3d 1350 (Fed. Cir. 2014)

BUYSAFE, INC., Plaintiff-Appellant,

v.

GOOGLE, INC., Defendant-Appellee

2013-1575

United States Court of Appeals, Federal Circuit

September 3, 2014

Appeal from the United States District Court for the District of Delaware in No. 11-CV-1282, Judge Leonard P. Stark.

STEPHEN M. HANKINS, Schiff Hardin LLP, of San Francisco, California, argued for plaintiff-appellant. With him on the brief was ALISON L. MADDEFORD. Of counsel on the brief were BRIAN D. SIFF and JAMES E. HANFT, of New York, New York, and DONALD E. STOUT, Antonelli, Terry, Stout & Kraus, LLP, of Arlington, Virginia.

ANDREW J. PINCUS, Mayer Brown, LLP, of Washington, DC, argued for defendant-appellee. With him on the brief were BRIAN A. ROSENTHAL, ANN MARIE DUFFY, and PAUL W. HUGHES. Of counsel on the brief were A. JOHN P. MANCINI and ALLISON LEVINE STILLMAN, of New York, New York.

Before TARANTO and HUGHES, Circuit Judges.[*]

OPINION

Page 1351

Taranto, Circuit Judge.

This case involves claims directed to creating familiar commercial arrangements by use of computers and networks. The district court held the asserted claims invalid because they cover subject matter ineligible for patenting under 35 U.S.C. § 101. buySAFE, Inc. v. Google, Inc., 964 F.Supp.2d 331 (D. Del. 2013). Under the approach to section 101 affirmed by the Supreme Court in the recent decision in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347, 82 L.Ed.2d 296, 189 L.Ed.2d 296 (2014), the district court's holding is correct.

Background

U.S. Patent No. 7,644,019, owned by buySAFE, Inc., claims methods and machine-readable media encoded to perform steps for guaranteeing a party's performance of its online transaction. In 2011, buySAFE sued Google, Inc., in the District of Delaware, alleging that Google infringes claims 1, 14, 39, and 44 of the '019 patent. Google moved for judgment on the pleadings, arguing that the asserted claims are invalid under 35 U.S.C. § 101.

Claim 1 is an independent method claim, with claim 14 dependent on it. Claim 39 is an independent claim to a computer-readable medium encoded with instructions to carry out the Claim 1 method, with claim 44 a dependent claim bearing the same relation to claim 39 as claim 14 does to claim 1. The parties agreed that the analysis of claims 1 and 14 would control the analysis of claims 39 and 44, so we discuss only the method claims here.

Claim 1 recites a method in which (1) a computer operated by the provider of a safe transaction service receives a request for a performance guarantee for an " online commercial transaction" ; (2) the computer processes the request by underwriting the requesting party in order to provide the transaction guarantee service; and (3) the computer offers, via a " computer network," a transaction guaranty that binds to the transaction upon the closing of the transaction. Specifically:

1. A method, comprising:

Page 1352

receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;

processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party, wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

Claim 14 narrows the claim 1 method to a guaranty " in one form of: a surety bond; a specialized bank guaranty; a specialized insurance policy; and a safe transaction guaranty."

The district court granted Google's motion for judgment on the pleadings, holding that the asserted claims fall outside section 101. The court concluded that the patent " describes a well-known, and widely-understood concept--a third party guarantee of a sales transaction--and then applied that concept using conventional computer technology and the Internet." buySAFE, 964 F.Supp.2d at 335-36. It makes no difference, the court added, that the guarantee of the underlying transaction attaches only when that transaction closes. Id. at 336. Moreover, the claimed computer " is used only for processing--a basic function of any general purpose computer." Id. Finally, the court explained, the claims " do not require specific programming" and are not " tied to any particular machine." Id. In these circumstances, the court ruled, the claims are outside section 101.

We have jurisdiction over buySAFE's appeal under 28 U.S.C. § 1295(a)(1). We review the grant of judgment on the pleadings de novo. See Allergan, Inc. v. Athena Cosmetics, Inc., 640 F.3d 1377, 1380 (Fed. Cir. 2011); M.R. v. Ridley School Dist., 744 F.3d 112, 117 (3d Cir. 2014).

Discussion

The Supreme Court has " interpreted § 101 and its predecessors . . . for more than 150 years" to " 'contain[] an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.'" Alice, 134 S.Ct. at 2354, quoting Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) (further internal quotation marks and brackets omitted). Under that interpretation, laws of nature, natural phenomena, and abstract ideas, no matter how " [g]roundbreaking, innovative, or even brilliant," Myriad, 133 S.Ct. at 2117, are outside what the statute means by " new and useful process, machine, manufacture, or composition of matter," 35 U.S.C. § 101. See Alice, 134 S.Ct. at 2357; Myriad, 133 S.Ct. at 2116, 2117.

In identifying the three types of excluded matter, the Court has explained that the underlying " concern" is " 'that patent law not inhibit further discovery by improperly tying up the future use' of these building blocks of human ingenuity." Alice, 134 S.Ct. at 2354, quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1301,

Page 1353

182 L.Ed.2d 321 (2012). The Court has invoked the concern to justify and inform understanding of, but not to identify section 101 exclusions beyond, the three recognized categories.

In defining the excluded categories, the Court has ruled that the exclusion applies if a claim involves a natural law or phenomenon or abstract idea, even if the particular natural law or phenomenon or abstract idea at issue is narrow. Mayo, 132 S.Ct. at 1303. The Court in Mayo rejected the contention that the very narrow scope of the natural law at issue was a reason to find patent eligibility, explaining the point with reference to both natural laws and one kind...

To continue reading

FREE SIGN UP