The Software IP Report

No Patentable Subject Matter in Gift Card Patent Claims

By Charles Bieneman

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

Patent claims drawn to “a method of exchanging a gift card” failed to recite patentable subject matter under 35 U.S.C. § 101, according to the court in Cardpool, Inc. v. Plastic Jungle, No. C 12-04182 WHA (N.D. Cal. Jan. 22, 2013). Therefore, the court granted the defendant’s motion to dismiss the plaintiff’s complaint for patent infringement.

The only independent claim of United States Patent No. 7,494,048 recited:

1. A method of exchanging a gift card, comprising:
providing data associated with a first gift card;
validating the data associated with the first gift card;
selecting either a money rebate associated with the first gift card, or a second gift card;
exchanging the first gift card for either a money rebate or the second gift card; and
charging a first service fee for issuing the second gift card.

Judge Alsup’s opinion made quick work of this claim, following the analysis set forth by the U.S. Supreme Court in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012). Quoting Mayo, the court noted that “[p]henomena of nature, . . . mental processes, and abstract intellectual concepts . . . are the basic tools of scientific and technological work.”

The court came close to simply stating that the claim of the ’048 patent was invalid because it was drawn to a business method, and, as we have seen in other Section 101 cases, plainly the claim’s breadth worked against it:

From the plain language of claim 1 of the ‘048 patent, the conclusion is inescapable that the invention merely covers a simple business transaction: a consumer A with an unwanted gift card provides it to person B, who validates the balance and then either cuts the consumer a check for the value of the card (for a fee), or exchanges it for another gift card (for a fee).

Further, even assuming that the claim required use of a computer (which was only mentioned in dependent claims), such use of a computer would not make the claim patentable: “[m]erely using a computer to apply an abstract idea is insufficient to create patentable subject matter.”

The court also addressed the plaintiff’s argument that the question of patentable subject matter should be decided at the summary judgment stage, after claim construction, rather than on a motion to dismiss. Citing the Federal Circuit’s opinion in Bancorp Services, L.L. C. v. Sun Life Assur. Co. of Canada, the court noted that, while claim construction was sometimes necessary to determine Section 101 questions, it was not necessarily a prerequisite. Here, the court declined to consider evidentiary materials submitted by the plaintiff because this was a motion to dismiss, and the evidentiary materials were unnecessary to decide the question of patentable subject matter.

The court concluded that

Plaintiff’s attempt to ‘inextricably intertwine’ the claim terms with computerized application is unavailing. “[S]imply appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, phenomena, and ideas patentable.”

(Quoting Mayo, 132 S. Ct. at 1300.)