The Software IP Report

Court Holds Patent Claims Fail Alice Test After PTAB Declined to Institute CBM on Patent-Eligibility Grounds

By Charles Bieneman

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

Patent claims directed to “providing money or an item of value to an account-holder” and “paying on behalf of a person for money or an item of value” fail the abstract idea test of Alice Corp. v. CLS Bank, according to a federal district court.  Global Cash Access Inc. v. NRT Technology Corp., No. 2:15-cv-00822 (D. Nev. March 31, 2016) (granting in part motion to dismiss under FRCP 12(b)(6)).  An unsurprising result, you say?  The USPTO’s Patent Trial and Appeal Board (PTAB) did not find it so.  As previously reported on this blog, in Petition for Covered Business Method Patent Review by NRT Technology Corp., CBM2015-00167 (PTAB January 22, 2016), the PTAB declined to institute a Covered Business Method (CBM) proceeding.  According to the PTAB, while claims of US Patent No. 6,081,792 qualified for Covered Business Method (CBM) review, the petitioner (the defendant here) had not shown that it was more likely than not that the claims were directed to an abstract idea. That different fora will reach different patent-eligibility results in analyzing the same claims is no surprise – but this is quite a demonstration of that point.

In addition to discounting the PTAB decision, the court here had no problem with the fact that an International Trade Commission proceeding had identified claim terms in dispute.  The plaintiff contended that this raised factual issues that could not be resolved on a Rule 12(b)(6) motion to dismiss.  The court disagreed, finding that there were no open questions of fact preventing resolution of the patent-eligibility question because “Defendants’ arguments are based on the ʼ792 Patent’s own descriptions of ubiquitous practices that existed before the patent was filed.”

The court then went on to find that, in light of the patent’s teachings, its claims “as a whole, are directed to the abstract idea of obtaining cash from a bank account through an alternative transaction after a first transaction fails.”  The court disagreed with the PTAB that the “Defendants had ‘oversimplified the challenged claims’ by characterizing them as being directed to “providing money to an account holder or using trial-and-error until success is achieved.”  The court found “that Defendants have persuasively identified a distilled version of the claims at issue: ‘offering an account-holder an alternative way to obtain cash or something of value — i.e., when the first transaction is denied, offering to perform a second type of transaction to achieve the same results.’”