Another One Bites the Dust – Federal Circuit Rejects Business Method Claim

The ripple effects of the U.S. Supreme Court’s recent ruling in Alice Corp. Pty. Ltd. v. CLS Bank Int’l continue to be felt by the holders of business method patents. The latest development is buySAFE, Inc. v. Google, Inc., yet another decision involving patent claims covering computer-implemented methods. In this case, the U.S. Court of Appeals for the Federal Circuit found it a “straightforward matter to conclude” that the claims in question were invalid under 35 U.S.C. Section 101.

What the patent was selling

BuySAFE owned a patent that claimed methods and machine-readable media encoded to perform steps for guaranteeing a party’s performance of its end of an online transaction. According to the patent, a computer operated by the provider of a safe transaction service receives a request for a performance guaranty and underwrites the requesting party. The computer then offers, via a “computer network,” a transaction guaranty that binds the transaction upon its closing.

BuySAFE sued Google for patent infringement, and Google asserted that the claims were ineligible for a patent under Sec. 101. The district court agreed, prompting buySAFE to appeal.

Why the court didn’t buy it

As the Federal Circuit noted on appeal, the U.S. Supreme Court has long held that laws of nature, natural phenomena and abstract ideas — “no matter how groundbreaking, innovative or even brilliant” — are not patentable under Sec. 101. The Court has also recognized other Sec. 101 exclusions to patentability beyond these categories.

In buySAFE, the Federal Circuit relied on the framework the Supreme Court laid out in Alice Corp. for identifying additional exclusions. Under that framework, a claim that relates to a patent-eligible human-made physical thing or human-controlled process will nonetheless fall outside Sec. 101 if:

  • It’s “directed to matter” in one of three excluded categories, and
  • The additional elements in the claim don’t supply an “inventive concept” (meaning a “new and useful application” of the ineligible matter in the physical realm).

When it comes to claims related to abstract ideas, the Federal Circuit noted, the Supreme Court in Alice Corp. made clear that a claim related to an abstract idea does not become eligible by merely requiring generic computer implementation.

The Federal Circuit concluded in buySAFE that the invocation of computers added no inventive concept to the idea of a transaction performance guaranty. “That a computer receives and sends the information over a network — with no further specification — is not even arguably inventive,” the court stated.

It likewise was insufficient that the transactions were online transactions, as attempting to limit the use of an abstract idea to a particular technological environment is generally insufficient to save a claim in this context.

How to make your pitch

In light of this decision and other recent rulings on the patent eligibility of computer-implemented methods, it is important to determine whether a contested method amounts to something significantly more than the ineligible matter itself. If the method does not, courts will likely deem the method patent-ineligible.