Federal Circuit, September 3, 2014, 2013-1575
buySAFE filed a patent infringement action against Google for allegedly infringing U.S. Patent No. 7,644,019 claiming methods and machine-readable media for creating commercial arrangements by use of a computer and a network. The district court found that the patent was invalid on the grounds that the claims are not patent-eligible subject matter under 35 U.S.C. 101. The Federal Court affirmed the district court ruling by applying the two-part framework for identifying patent-eligible subject matter suggested in Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014).
Claim 1 of the '019 patent is directed to a method in which (1) a computer operated by the provider of a safe transaction service receives a request for a performance guaranty for an online commercial transaction, (2) the computer processes the request by underwriting the requesting party in order to provide the transaction guaranty service, and (3) the computer offers, via a computer network, a transaction guaranty that binds to the transaction upon the closing of the transaction.
With regard to the first prong of the Alice framework, the Federal Circuit found that that the claims at issue were directed an abstract idea, ruling that the underlying idea is creating “a contractual relation” between parties and this kind of contractual relations is “a fundamental economic practice long prevalent in our system of commerce." The Federal Circuit also pointed out that the underlying process is similar to the method of entering into contracts to hedge risk in commodity prices in Bilski v. Kappos, 561 U.S. 593 (2010) and the process for “exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk,” in Alice v. CLS Bank. As to the second prong of the Alice framework, the Federal Circuit held that the claims’ invocation of computers adds no inventive concept because the computer functionality is generic and the application of the transactions to online transactions is not enough to transform the idea into a patent-eligible application.
In this case, the Federal Circuit confirmed that the addition of a computer in a method claim may not be sufficient to transform the abstract idea into a patent-eligible application if the underlying idea is deemed to be "a fundamental economic practice long prevalent in our system of commerce" and the computer functionality is generic.