The Software IP Report

Patent Claims to Authenticating Users in Transactions Lack Technical Improvement, Fail Patent-Eligibility: Universal Secure Registry LLC v. Apple Inc.

Claims directed to authenticating users for a transaction are not patent-eligible under 35 U.S.C. § 101 and the Alice/Mayo patent-eligibility test, and therefore the court granted a Rule 12(b)(6) motion to dismiss in Universal Secure Registry LLC v. Apple Inc., Civ. No. 17-585-CFC-SRF (D. Del. June 30, 2020). The court overruled a Magistrate Judge’s report and recommendation that the motion be denied, and came just a week after another decision by the same judge (Colm Connolly) in another case holding patent claims directed to authenticating users to transactions ineligible.

At issue in this case were U.S. Patent Nos. 8,856,539; 9,100,826; 8,577,813; and 9,530,137. The court began by analyzing claim 22 of the ’539 patent, which recites as follows:

A method for providing information to a provider to enable transactions between the provider and entities who have secure data stored in a secure registry in which each entity is identified by a time-varying multicharacter code, the method comprising:

receiving a transaction request including at least the time-varying multicharacter code for an entity on whose behalf a transaction is to take place and an indication of the provider requesting the transaction;

mapping the time-varying multicharacter code to an identity of the entity using the time-varying multicharacter code;

determining compliance with any access restrictions for the provider to secure data of the entity for completing the transaction based at least in part on the indication of the provider and the time-varying multicharacter code of the transaction request;

accessing information of the entity required to perform the transaction based on the determined compliance with any access restrictions for the provider, the information including account identifying information;

providing the account identifying information to a third party without providing the account identifying information to the provider to enable or deny the transaction; and

enabling or denying the provider to perform the transaction without the provider’s knowledge of the account identifying information.

Representative claims of the other patents are not reproduced here in an attempt at conciseness, but can be found that the above links. For all of the patents, the Magistrate Judge determined they had a “plain focus” on improving “computer functionality,” rather than “on economic or other tasks for which computer is used in its ordinary capacity.” The District Judge disagreed with this conclusion, finding the patents failed step one of the Alice test as directed to the abstract idea of “the secure verification of a person’s identity.”

The ’539 patent, the court said, “is not materially different from the patent at issue in Prism Techs. LLC v. T-Mobile USA, Inc.,” (Fed. Cir. 2017). Similar to the claims there, claim 22 of the ’539 patent recited steps of receiving and processing a transaction request, including authenticating a user to a merchant without the merchant “obtaining knowledge of the customer’s identifying information.” Claim 22 therefore “is directed to the abstract idea of obtaining the secure verification of a user’s identity to enable a transaction.”

Alice step two could not save this claim. The patent itself acknowledged that all of the claim steps “are accomplished by implementing well-known methods using conventional computer components.” The patent owner argued that there was a saving innovation in allowing a transaction to be approved without a merchant obtaining account identifying information. The court’s response was that “sending data to a third-party as opposed to the merchant” was “insignificant post-solution activity” and “not a technological innovation.”

The court also rejected the argument that the recited “time-varying multicharacter code” was an inventive concept conferring patent-eligibility, finding that “the claimed method employs the . . . time-varying code in a customary manner.”

The court then reviewed representative claims of the other three patents-in-suit, albeit in less detail, reaching essentially the same result. The claims were all directed to abstract ideas related to processing transactions, and all use conventional computing technology.