The Software IP Report
“Transaction Security Apparatus” Held Not Patent-Eligible
By Charles Bieneman
Categories: Patent Eligibility, Software Patents, The Software IP Report
Patent claims directed to securing banking transactions carried out over the Internet were held patent-ineligible in Joao Bock Transaction Sys. v. Jack Henry & Assocs., Civ. No. 12-1138-SLR (D. Del. Dec. 15, 2014). Finding that the claims were directed to an “abstract idea” with no additional innovation, the court granted the Defendant’s motion for summary judgment of invalidity of U.S. Patent No. 7,096,003 under 35 U.S.C. § 101.
Claim 1 of the ’003 patent recited a “transaction security apparatus” that included a “memory device” and a “processing device.” The memory device “stores a limitation or restriction regarding a banking transaction, wherein the limitation or restriction prohibits” bank account withdrawals or use, and is received in the memory device “on or over at least one of the Internet and the World Wide Web.” The processing device processes the “banking transaction,” and “generates a signal for allowing or disallowing the banking transaction.”
The court employed the now familiar two-part test of Alice Corp. Pty. Ltd. v. CLS Bank Int’l., first whether the patent claims were directed to an “abstract idea,” and, second, whether the claims recited “significantly more” than the abstract idea to render the claims patent-eligible. Here, although never specifically stating precisely to what abstract idea the claims were drawn, the court had no problem concluding that the claims of the ’003 patent were in fact drawn to an abstract idea.
Pages 12-13 of Judge Robinson’s opinion in particular are worth your attention; there, the court reproduced a chart proffered by the defendant to describe claim 30 of the’003 patent. One column of the chart reproduced the language of the ’003 patent claims. Another column described how the claims could be performed “Without a Computer.” The defendant characterized the claim as analogous to a bank customer calling a bank and stopping payment on a check, or putting a hold on an account, and the bank then doing so. The court agreed with the Defendant’s analysis that the claims could be reduced to an abstract idea.
The court rejected the plaintiff’s contention that the defendant’s “hypothetical ignores what may be the most important element of these claims – that the ‘limitation or restriction’ comes from the ‘communications device associated with an individual account holder’ – in other words, that the claim is performed by computers.” The court explained that this was “precisely what defendant seeks to demonstrate, that the abstract idea embodied by the claim is a conventional business practice utilized by bankers or financial institutions in their dealings with individual account holders without the use of computers.”
Further, the claims of the ’003 patent were not limited by any inventive concept that rendered them patent-eligible. Recited computers were used only for “basic functions.” Citing the Federal Circuit’s recent decision in DDR Holdings LLC v. Hotels.com, L.P., the court here explained that “it is no longer sufficient to use the Internet through generic computer components to achieve a useful result.” The claims in DDR Holdings survived because they offered a claimed solution “necessarily rooted in computer technology,” whereas the claims here “fall squarely within the former category of patent ineligible claims.” The fact that the claims here were directed to an apparatus did not save them.