The Software IP Report

Court Finds Patent Claims Directed to Abstract Idea But Denies Motion to Dismiss

By Charles Bieneman

Categories: Patent Eligibility, Software Patents, The Software IP Report

Patent claims directed “to the abstract idea of verifying a transaction” included “a limitation requiring pseudorandom tag generating software that could not be done with pen and paper,” which limitation could plausibly be read as narrowing the claims to make them patent-eligible. Therefore, the court in Card Verification Solutions, LLC v. Citigroup Inc., No. 13 C 6339 (N.D. Ill. Sept. 29, 2014), denied the defendant’s motion to dismiss for lack of patent-eligible subject matter under 35 U.S.C. § 101.

Claims of United States Patent No. 5,826,245 recite methods such as “giving verification information for a transaction between an initiating party and a verification-seeking party, the verification information being given by a third, verifying party, based on confidential information in the possession of the initiating party.” The court did not hesitate to say that “the claims are drawn to the concept of verifying transaction information,” which was a fundamental economic practice, and therefore an “abstract idea.”

Nonetheless, “[a] plausible interpretation of the patent is that computing devices, software, keyboards, and credit card readers would be required to use the invention.” While mere implementation in a computer did not make an abstract idea patent-eligible, in this case “an entirely plausible interpretation of the claims include a limitation requiring pseudorandom tag generating software that could not be done with pen and paper.”

Accordingly, the court denied the defendant’s motion to dismiss without prejudice, noting that it was “free to challenge the validity of the ‘245 Patent after discovery and claim construction are completed in this case.”

Editorial comment:  this case appears to be an outlier amid the flurry of post-Alice Corp. cases holding seemingly similar patent claims to recite unpatentable subject matter.  The court here did not do what other courts have done, even on a motion to dismiss at the pleadings stage, and look at whether the alleged innovation taking the claims out of the realm of an unpatentable abstract idea was a feature that would have been found in the prior art.  Had the court been willing to go down this road, one has to believe that the result in this case would have been different.  One also has to think that the ‘245 patent would be susceptible to Covered Business Method Patent Review.