IP Law Bulletin

In the recent decision of CyberSource Corp. v. Retail Decisions, Inc., the Federal Circuit affirmed the District Court for the Northern District of California’s summary judgment holding two software method claims to be invalid because they are drawn to an un-patentable mental process. CyberSource’s claimed invention relates to a method for detecting fraud in a credit card transaction by utilizing Internet Protocol (IP) information, e.g., a user’s IP address. The court held that the method claims do not meet the requirements of the machine-or-transformation test and, furthermore, recite an un-patentable mental process that could be performed in a human mind.

Of particular note in this case is the court’s treatment of the second claim under consideration, a so-called “Beauregard claim” directed to a computer readable medium containing program instructions to execute the disclosed method. Specifically, the court declined to recognize the computer readable medium as a statutory manufacture or machine and invalidated the claim on the same grounds as the method claim. The court stated that it looks to the underlying invention of the claim and is not bound by the “statutory category…a claim’s language is crafted to literally invoke.” In this case, the underlying invention of both claims was identical, i.e., the method of fraud detection. Explaining further, the court noted that merely reciting a computer readable medium does not guarantee patent eligible subject matter where a computer device is not required to perform the method.

Although post-Bilski law is still in an early development stage, practitioners should consider implications this holding may have when drafting software method claims. In particular, practitioners should consider drafting method claims that cannot be performed in the human mind alone. Of particular help may be two cited cases, SiRF Tech, Inc. v. Int’l Trade Comm’n and Research Corp. Techs. V. Microsoft Corp., in which software methods were held to be patentable due to the inability to perform the methods without a computer or other manufactured device.

To read the Federal Circuit’s opinion, click here.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

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