Cybersource Corp.. v. Retail Decisions Inc.

• Decision Date: 16 August 2011
• Docket Number: No. 2009–1358.,2009–1358.
• Citation: 654 F.3d 1366,99 U.S.P.Q.2d 1690
• Parties: CYBERSOURCE CORPORATION, Plaintiff–Appellant,v.RETAIL DECISIONS, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

654 F.3d 1366

99 U.S.P.Q.2d 1690

CYBERSOURCE CORPORATION, Plaintiff–Appellant,

v.RETAIL DECISIONS, INC., Defendant–Appellee.

No. 2009–1358.

United States Court of Appeals, Federal Circuit.

Aug. 16, 2011.

J. Michael Jakes, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Erika H. Arner and Justin R. Lowery. Of counsel on the brief was Marc J. Pernick, Morrison & Forester, LLP, of Palo Alto, CA.Scott J. Bornstein, Greenberg Traurig, LLP, of New York, NY argued for defendant-appellee. With him on the brief was Allan A. Kassenoff. Of counsel was James W. Soong, of E. Palo Alto, CA.Before BRYSON, DYK, and PROST, Circuit Judges.DYK, Circuit Judge.

Plaintiff-appellant CyberSource Corporation (“CyberSource”) appeals from a decision of the United States District Court for the Northern District of California. The district court granted summary judgment of invalidity of claims 2 and 3 of U.S. Patent No. 6,029,154 (“'154 patent”) under 35 U.S.C. § 101 for failure to recite patent-eligible subject matter. See CyberSource Corp. v. Retail Decisions, Inc., 620 F.Supp.2d 1068 (N.D.Cal.2009). We affirm.

Background

CyberSource is the owner by assignment of the '154 patent, which recites a “method and system for detecting fraud in a credit card transaction between [a] consumer and a merchant over the Internet.” '154 patent, at [57]. The ' 154 patent's specification explains that prior art credit card fraud detection systems—which generally rely on billing addresses and personal identification information—work well for “face-to-face” transactions and transactions where “the merchant is actually shipping a package ... to the address of a customer.” Id. col.1 ll.21–24. But for online sales where the product purchased is downloadable content, the patent explains, “address and identity information are not enough to adequately verify that the customer who is purchasing the goods is actually the owner of the credit card.” Id. col.1 ll.28–30.

The '154 patent purports to solve this problem by using “Internet address” information (IP addresses, MAC addresses, e-mail addresses, etc.) to determine whether an Internet address relating to a particular transaction “is consistent with other Internet addresses [that have been] used in transactions utilizing [the same] credit card.” Id. col.3 ll.15–16. As we discuss in detail below, the claims of the '154 patent are broad and essentially purport to encompass any method or system for detecting credit card fraud which utilizes information relating credit card transactions to particular “Internet address [es].” ¹

CyberSource brought suit against Retail Decisions, Inc. (“Retail Decisions”) on August 11, 2004, alleging infringement of the '154 patent. Retail Decisions thereafter initiated an ex parte reexamination of the '154 patent, and the district court stayed its proceedings while the U.S. Patent and Trademark Office (“PTO”) conducted the examination. The district court resumed proceedings after the PTO reissued the '154 patent with amended claims on August 5, 2008. On October 30, 2008, this court decided In re Bilski, 545 F.3d 943 (Fed.Cir.2008) (en banc). Retail Decisions thereafter moved for summary judgment of invalidity under 35 U.S.C. § 101. After briefing and a hearing, the district court found that claim 3 recited “an unpatentable mental process for collecting data and weighing values,” which did “not become patentable by tossing in references to [I]nternet commerce.” CyberSource, 620 F.Supp.2d at 1077. The court further found with respect to claim 2 that “simply appending ‘A computer readable media including program instructions ...’ to an otherwise non-statutory process claim is insufficient to make it statutory.” Id. at 1080. The district court thus granted summary judgment of invalidity. Id. at 1078.

CyberSource appealed to this court in April 2009. After the Supreme Court granted certiorari in Bilski v. Doll, ––– U.S. ––––, 129 S.Ct. 2735, 174 L.Ed.2d 246 (2009), we granted CyberSource's motion to stay the proceedings. Briefing was resumed on October 28, 2010, following the Supreme Court's decision. See Bilski v. Kappos, ––– U.S. ––––, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010). We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

Discussion

We review grants of summary judgment de novo. Tokai Corp. v. Easton Enters., Inc., 632 F.3d 1358, 1366 (Fed.Cir.2011). Issues of patent-eligible subject matter are questions of law and are reviewed without deference. Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 867 (Fed.Cir.2010).

I

Two claims of the '154 patent are at issue in this case. Claim 3 recites a process for verifying the validity of credit card transactions over the Internet. See J.A. 32 ('154 Patent Reexamination Certificate), col.2 ll.38–47. Claim 2 recites a computer readable medium containing program instructions for executing the same process. See id. col.2 ll.9–37.

The categories of patent-eligible subject matter are set forth in § 101, which provides:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 U.S.C. § 101. Section 100(b) of the Patent Act defines the “process” category tautologically, stating that:

The term “process” means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.

35 U.S.C. § 100(b). “In choosing such expansive terms ... modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope.” Bilski, 130 S.Ct. at 3225 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980)).

In interpreting § 101, this court concluded in Bilski that the “machine-or-transformation” test was the appropriate test for the patentability of process claims. 545 F.3d at 943. Thus, we held that a claimed process would only be “patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus; or (2) it transforms a particular article into a different state or thing.” Id. at 954. We further held that, to satisfy the machine prong of the test, the use of a machine “must impose meaningful limits on the claim's scope.” Id. at 961. Applying this test, we found that Bilski's claimed “method of hedging risk in the field of commodities trading” was unpatentable under § 101. Id. at 949, 963–66. The Supreme Court affirmed our Bilski decision, but in doing so it rejected use of the machine-or-transformation test as the exclusive test for the patentability of a claimed process. See Bilski, 130 S.Ct. at 3226. While the “machine-or-transformation test is a useful and important clue,” the Court stated, it “is not the sole test for deciding whether an invention is a patent-eligible ‘process.’ ” Id. at 3227. The Court declined to “define further what constitutes a patentable ‘process,’ beyond pointing to the definition of that term provided in § 100(b) and looking to the guideposts in [the Court's precedents].” Id. at 3232. “The Court's precedents provide three specific exceptions to § 101's broad patent-eligibility principles: ‘laws of nature, physical phenomena, and abstract ideas.’ ” Id. at 3225 (quoting Diamond, 447 U.S. at 309, 100 S.Ct. 2204). The Court noted that these judicially created exceptions “have defined the reach of the statute as a matter of statutory stare decisis going back 150 years,” and are “ ‘part of the storehouse of knowledge of all men ... free to all men and reserved exclusively to none.’ ” Id. (quoting Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588 (1948)). In holding that the machine-or-transformation test is not the exclusive test for a process's patent-eligibility, the Supreme Court expressly left open the door for “the Federal Circuit's development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.” Id. at 3231.

II

We first address claim 3 of the '154 patent, which recites a method for verifying the validity of a credit card transaction over the Internet. Claim 3, as amended during reexamination, reads in its entirety:

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.

J.A. 32 ('154 Patent Reexamination Certificate), col.2 ll.38–47. CyberSource acknowledges that the “Internet address” recited in step (a) of claim 3 “may be, for example, an Internet protocol (IP) address or an e-mail address for the particular credit card transaction.” Appellant's Br. 7. CyberSource further concedes that the “map of credit card numbers” recited in step (b) can be as simple as a list of credit card transactions relating to a particular IP address. See Appellant's Br. 9. Finally, step (c) does not limit claim 3 to any specific fraud detection formula or mathematical algorithm, but rather broadly purports to encompass any means of “utilizing the map of credit card numbers to determine if the credit card transaction is valid.” J.A. 32, col.2 ll.46–47.

The district court found that claim 3 fails to meet either prong of the machine-or-transformation test. CyberSource, 620 F.Supp.2d at 1078. We agree. As the district court correctly held, the method of claim 3 simply requires one to “obtain and compare intangible data pertinent to business risks.” Id. at 1073. The mere collection and organization of data regarding credit card numbers and Internet...