Federal Circuit Affirms CyberSource Decision

On August 16, 2011, the Court of Appeals for the Federal Circuit (CAFC) affirmed the district court decision in CyberSource Corp. v. Retail Decisions Inc., upholding the district court's grant of summary judgment of invalidity under 35 U.S.C. § 101.

The claims at issue were directed to 1) a method for verifying the validity of a credit card transaction over the Internet and 2) a computer-readable medium containing program instructions for detecting fraud in such a credit card transaction.

Regarding the issue of patent-eligible subject matter, the CAFC stated, "[W]e have held that, as a general matter, programming a general purpose computer to perform an algorithm ‘creates a new machine, because a general purpose computer becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software." But the CAFC further stated that it has " never suggested that simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind falls within the [] rule." In this instance, the CAFC treated claim 2 directed to the computer-readable medium as a process claim for patent-eligibility purposes despite its "Beauregard" format (claims directed to articles of manufacture, namely, computer-readable media, are often referred to as "Beauregard" claims and, at least until this decision, were generally considered patent-eligible subject matter).

According to the CAFC, a method or series of steps that can be performed entirely by the human mind is not patentable-eligible subject matter under § 101, even when the steps are computer-executable instructions embodied on a computer-readable media. The CAFC stated that the "application of [only] human intelligence to the solution of practical problems is no more than a claim to a fundamental principle" (citing the Federal Circuit's own language in its Bilski decision). The CAFC indicated that courts should look to the underlying invention as directed by In re Abele (684 F.2d 902 (CCPA 1982)), regardless of the language used in the claim's preamble directed to a statutory class (i.e., a computer-readable medium). Otherwise, the Court reasoned, the CAFC would be exalting "form over substance." The Federal Circuit, however, did not address the underlying differences between CyberSource's computer-readable media claim and Abele's apparatus claim.

It appears that the CAFC felt that the method claim was too broad and, accordingly, held that the computer-readable medium with program instructions for performing the method did not satisfy the requirements of 35 U.S.C. § 101, despite the claim's "Beauregard"-style formatting. After this decision, the Beauregard-style claim format may be more often called into question and claims directed to software stored on a computer-readable storage medium may be more difficult to obtain.

The case is CyberSource Corp. v. Retail Decisions, Inc., case number 2009-1358, in the U.S. Court of Appeals for the Federal Circuit. The patent-in-suit is U.S. Patent Number 6,029,154.