Beauregard claims took a hit in the CyberSource Corp. v. Retail Decisions, Inc. decision at the US Court of Appeals for the Federal Circuit.  The Court also pronounced a “human mind power” test for patentable subject matter.

CyberSource is the owner of U.S. Patent No. 6,029,154, which recites a “method and system for detecting fraud in a credit card transaction between [a] consumer and a merchant over the Internet.” For online sales where the product purchased is downloadable content, the patent explains, “address and identity information are not enough to adequately verify that the customer who is purchasing the goods is actually the owner of the credit card.”

The ’154 patent solves this problem by using “Internet address” information (IP addresses, MAC addresses, e-mail addresses, etc.) to determine whether an Internet address relating to a particular transaction “is consistent with other Internet addresses [that have been] used in transactions utilizing [the same] credit card.”

Claim 3, as amended during reexamination, reads:

3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:

(a) obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;
(b) constructing a map of credit card numbers based upon the other transactions and;
(c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.

The CAFC held that the claims are unpatentable mental processes:

The district court found that claim 3 recited “an unpatentable mental process for collecting data and weighing values,” which did “not become patentable by tossing in references to [I]nternet commerce.” The court further found with respect to claim 2 that “simply appending ‘A computer readable media including program instructions . . .’ to an otherwise non-statutory process claim is insufficient to make it statutory.

The method of claim 3 simply requires one to “obtain and compare intangible data pertinent to business risks.” The mere collection and organization of data regarding credit card numbers and Internet addresses is insufficient to meet the transformation prong of the test, and the plain language of claim 3 does not require the method to be performed by a particular machine, or even a machine at all.

We find that claim 3 of the ’154 patent fails to recite patent-eligible subject matter because it is drawn to an unpatentable mental process—a subcategory of unpatentable abstract ideas.

[C]laim 3’s steps can all be performed in the human mind. Such a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101. Methods which can be performed entirely in the human mind are unpatentable not because there is anything wrong with claiming mental method steps as part of a process containing non-mental steps,3 but rather because computational methods which can be performed entirely in the human mind are the types of methods that embody the “basic tools of scientific and technological work” that are free to all men and reserved exclusively to none. Benson, 409 U.S. at 67.

A Beauregard claim is a patent claim named after In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995)—is a claim to a computer readable medium (e.g., a disk, hard drive, or other data storage device) containing program instructions for a computer to perform a particular process.

Claim 2, as amended during reexamination, reads in its entirety:

2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of…

Again, the court just did not buy the tangible media angle:

Regardless of what statutory category (“process, machine, manufacture, or composition of matter,” 35 U.S.C. § 101) a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information.

In the present case, CyberSource has not met its burden to demonstrate that claim 2 is “truly drawn to a specific” computer readable medium, rather than to the underlying method of credit card fraud detection. … we have 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 Alappat rule. Thus, despite its Beauregard claim format, under Abele, we treat claim 2 as a process claim for patent-eligibility purposes.

William Morriss, a patent attorney with Frost Brown Todd LLC noted that there have been two Fed. Cir. cases analyzing Bilski v. Kappos in the software context.  One of them (Research Technologies Corp. v. Microsoft) used very permissive analysis. The other, Cybersource, was very restrictive.  But we don’t know which mode of analysis the Federal Circuit will ultimately embrace. Judge Dyk, the author of the Cybersource decision, was also the author of a stridently pro machine or transformation concurrence in In re Bilski.  Given the heavy reliance on machine or transformation in Cybersource, Morriss said: “I suspect that Judge Dyk would have found a way to invalidate any method which achieves a result which could be obtained by a human (assuming infinite time, patience, attention to detail and memory). If that’s the course the Federal Circuit ultimately takes, adding various computers and databases to the claim wouldn’t help, since anything a computer can do a human, in theory, could do as well.”

As noted in the Cybersource decision:

[It] is clear in the present case that one could mentally perform the fraud detection method that underlies both claims 2 and 3 of the ’154 patent, as the method consists of only the general approach of obtaining information about credit card transactions utilizing an Internet address and then using that information in some undefined manner to determine if the credit card transaction is valid. Because claims 2 and 3 attempt to capture unpatentable mental processes (i.e., abstract ideas), they are invalid under § 101.

For inventions in the diagnostic field, careful drafting of claims will be necessary to avoid the appearance of a method where all the steps can all be performed in the human mind.  No word yet from the Amazing Kreskin.

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