United States: Claims Directed To Transaction Performance Guaranty Held Patent Ineligible Under § 101

In buySAFE, Inc. v. Google, Inc., No. 13-1575 (Fed. Cir. Sept. 3, 2014), the Federal Circuit affirmed the district court's determination that the asserted claims were invalid under 35 U.S.C. § 101 for being directed to patent-ineligible subject matter.

buySAFE, Inc. ("buySAFE") owns U.S. Patent No. 7,644,019 ("the '019 patent"), directed to computer applications for guaranteeing a party's performance of its online transaction.

buySAFE sued Google, Inc. ("Google"), alleging that Google infringed the '019 patent. Google moved for judgment on the pleadings, alleging that the asserted claims were invalid under 35 U.S.C. § 101. The district court granted Google's motion, ruling that the '019 patent "describes a well-known, and
widely-understood concept . . . and then applied that concept using conventional computer technology and the Internet." Slip op. at 4 (quoting buySAFE, Inc. v. Google, Inc., 964 F. Supp. 2d 331, 335-36 (D. Del. 2013)). The district court also found that the claims only require a generic computer, do not specify any definite programming, and are not tied to a particular machine. buySAFE appealed.

On appeal, the Federal Circuit first considered whether the asserted claims fell into one of the exceptions to patent eligibility under § 101. The Court explained that the excluded categories—laws of nature, natural phenomena, and abstract ideas—may apply "even if the particular natural law or phenomenon or abstract idea at issue is narrow." Id. at 5 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1303 (2012)). After setting forth the Supreme Court's two-part test outlined in Mayo and Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Court determined that the asserted claims were "squarely about creating a contractual relationship—a 'transaction performance guaranty'—that is beyond question of ancient lineage." Slip op. at 9 (citing Willis D. Morgan, The History and Economics of Suretyship, 12 Cornell L.Q. 153 (1927)). The Court also explained that the dependent claims merely offer particular types of known transactions that, while narrowing, do not make the claims more or less abstract under § 101.

The Court next analyzed whether the claims' use of computers amounted to an inventive concept. The Court held that the recited computer functionality "adds no inventive concept" because the functionality was "generic" in that the "computer receives a request for a guarantee and transmits an offer of guarantee in return" without further detail. Id. The Court also noted that the claims-at-issue were similar to the claims found to be unpatentable in Alice, noting that "receiv[ing] and send[ing] the information over a network—with no further specification—is not even arguably inventive." Id. The Court also determined that the recitation of the transactions being "online transactions" merely limited the claims to a particular technological environment, which was not adequate to make the claim statutory under § 101. Id.

Accordingly, the Court affirmed the district court's finding that the asserted claims were invalid under 35 U.S.C. § 101.

Judges: Taranto (author), Hughes

[Appealed from D. Del., Judge Stark]

This article previously appeared in Last Month at the Federal Circuit, October 2014

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