Claims of US patent 7,644,019 in the name of buySAFE, INC.were found
to be patent eligible subject matter under 35 USC 101 because the invention is
merely using a generic computer to create contractual relationships.
The claims invocation of
computers adds no inventive concept.
Broad description of the invention
The ’019 patent claims methods and systems that are about creating a
contractual relationship, 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
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
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 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., ___ U.S. ___, 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.
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 of abstract idea, namely, mathematical concepts.
[O]ur cases have not distinguished
among different laws of nature according to whether or not the principles they
embody are sufficiently narrow. See, e.g., [Parker v.] Flook, 437 U.S. 584, 98 S.Ct. 2522, 57
L.Ed.2d 451 [(1978)] (holding narrow mathematical formula unpatentable). And this is
understandable. Courts and judges are not institutionally well suited to making
the kinds of judgments needed to distinguish among different laws of nature.
And so the cases have endorsed a bright-line prohibition against patenting laws
of nature, mathematical formulas and the like, which serves as a somewhat more
easily administered proxy for the underlying `building-block' concern.
Based on the three implicit
exclusions, the Court has created a framework for identifying claims that fall
outside section 101. Alice, 134 S.Ct. at 2355; Mayo, 132 S.Ct. at 1296-97. A claim that directly reads on
matter in the three identified categories is outside section 101. Mayo, 132 S.Ct. at 1293. But the provision also excludes
the subject matter of certain claims that by their terms read on a human-made
physical thing ("machine, manufacture, or composition of matter") or
a human-controlled series of physical acts ("process") rather than
laws of nature, natural phenomena, and abstract ideas. Such a claim falls
outside section 101 if (a) it is "directed to" matter in one of the
three excluded categories and (b) "the additional elements" do not
supply an "inventive concept" in the physical realm of things and
acts—a "new and useful application" of the ineligible matter in the
physical realm— that ensures that the patent is on something
"significantly more than" the ineligible matter itself. Alice, 134 S.Ct. at 2355, 2357 (internal quotation marks omitted);
see Mayo, 132 S.Ct. at 1294, 1299, 1300. This two-stage inquiry requires
examination of claim elements "both individually and `as an ordered
combination.'" Alice, 134 S.Ct. at 2355.
Several decisions of the Court have
involved the "abstract idea" category, which is at issue here. Two
aspects of those decisions are important for present purposes: what type of
matter the Court has held to come within the category of "abstract
idea"; and what invocations of a computer in a claim that involves such an
abstract idea are insufficient to pass the test of an inventive concept in the
application of such an idea.
As to the first question: The
relevant Supreme Court cases are those which find an abstract idea in certain
arrangements involving contractual relations, which are intangible entities. Bilski v. Kappos, 561 U.S. 593, 130 S.Ct. 3218, 177
L.Ed.2d 792 (2010), involved a method of entering into contracts to hedge risk in commodity
prices, and Alice involved methods and systems for "exchanging
financial obligations between two parties using a third-party intermediary to
mitigate settlement risk," Alice, 134 S.Ct. at 2356. More narrowly,
In simultaneously rejecting a
general business-method exception to patent eligibility and finding the hedging
claims invalid, moreover, Bilski makes clear that the recognition that
the formation or manipulation of economic relations may involve an abstract
idea does not amount to creation of a business-method exception. The required
section 101 inquiry has a second step beyond identification of an abstract
idea. If enough extra is included in a claim, it passes muster under section
101 even if it amounts to a "business method."
As to the second question: The Court
in Alice made clear that a claim directed to an abstract idea does not
move into section 101 eligibility territory by "merely requir[ing] generic
computer implementation." Alice, 134 S.Ct. at 2357. In so holding, the Court
in Alice relied on Mayo for the proposition that "`[s]imply
appending conventional steps, specified at a high level of generality,' was not
`enough' to supply an `"inventive concept."'" Id.
(quoting Mayo, 132 S.Ct. at 1300, 1297, 1294). Neither "attempting to limit
the use of [the idea] to a particular technological environment" nor a
"wholly generic computer implementation" is sufficient. Id. at
2358 (internal quotation marks omitted). The Court found nothing sufficient in
Alice Corp.'s claims.
The Court explained that the method
claims in Alice invoke "the use of a computer to create electronic
records, track multiple transactions, and issue simultaneous
instructions," id. at 2359; "electronic recordkeeping," id.;
and "the use of a computer to obtain data, adjust account balances, and
issue automated instructions," id. They "do not, for example,
purport to improve the functioning of the computer itself. See [CLS Bank Int'l v. Alice Corp. Pty.
Ltd., 717 F.3d
1269, 1286 (Fed.Cir.2013) (Lourie, J., concurring)] (`There is no specific or limiting
recitation of ... improved computer technology...'); Brief for United States as
Amicus Curiae 28-30." Alice, 134 S.Ct. at 2359. They do not "effect an
improvement in any other technology or technical field," and they merely
invoke "some unspecified, generic computer." Id. at 2359-60.
The system claims in Alice are "no different," the Court
added, explaining that they invoke a "`data processing system' with a
`communications controller' and `data storage unit,'" which are
"purely functional and generic" components for "performing the
basic calculation, storage, and transmission functions required by the method
claims." Id. at 2360. Finally, the Court viewed the claims to a
computer-readable medium for the methods as indistinguishable for section 101
Given the new Supreme Court
authority in this delicate area, and the simplicity of the present case under
that authority, there is no need to parse our own precedents here. The claims
in this case do not push or even test the boundaries of the Supreme Court
precedents under section
101. The claims are squarely about
creating a contractual relationship—a "transaction performance
guaranty"—that is beyond question of ancient lineage. See Willis D.
Morgan, The History and Economics of Suretyship, 12 Cornell L.Q. 153
(1927). The dependent claims' narrowing to particular types of such
relationships, themselves familiar, does not change the analysis. This kind of
narrowing of such long-familiar commercial transactions does not make the idea
non-abstract for section 101 purposes. See Mayo, 132 S.Ct. at 1301. The claims thus are directed to an
The claims' invocation of computers
adds no inventive concept. The computer functionality is generic—indeed, quite
limited: a computer receives a request for a guarantee and transmits an offer
of guarantee in return. There is no further detail. That a computer receives
and sends the information over a network—with no further specification—is not
even arguably inventive. The computers in Alice were receiving and
sending information over networks connecting the intermediary to the other
institutions involved, and the Court found the claimed role of the computers insufficient.
See also CyberSource Corp. v. Retail
Decisions, Inc., 654 F.3d 1366, 1370 (Fed.Cir.2011) (use of Internet to verify credit-card
transaction does not add enough to abstract idea of verifying the transaction).
And it likewise cannot be enough that the transactions being guaranteed are
themselves online transactions. At best, that narrowing is an "attempt
to limit the use" of the abstract guarantee idea "to a particular
technological environment," which has long been held insufficient to save
a claim in this context. See Alice, 134 S.Ct. at 2358; Mayo, 132 S.Ct. at 1294; Bilski, 561 U.S. at 610-11, 130 S.Ct. 3218; Diehr, 450 U.S. at 191, 101 S.Ct. 1048.
In short, with the approach to this
kind of section 101 issue clarified by Alice, it is a straightforward
matter to conclude that the claims in this case are invalid.