In CyberSource Corp. v. Retail Decisions, Inc., No. 2009-1358 (Fed. Cir. Aug. 16, 2011), the Federal Circuit affirmed the Northern District of California's grant of summary judgment of invalidity for two reexamined claims that are directed to detecting credit card fraud over the Internet. One claim recites a "method for verifying the validity of a credit card transaction over the Internet," and includes steps such as "obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction," and "constructing" and "using" a map of credit card numbers based upon other transactions to determine if the transaction is valid.

The Federal Circuit held that the "mere collection and organization of data regarding credit card numbers and Internet addresses is insufficient to meet the transformation prong ... and the plain language ... does not require the method to be performed by a particular machine, or even a machine at all." The Federal Circuit reiterated that "[data-gathering] step[s] cannot make an otherwise nonstatutory claim statutory." Further, aside from the machine-or-transformation test, which is not the sole test for patent eligibility, this claim also failed to recite eligible subject matter because it was drawn to an unpatentable mental process. Obtaining information about an Internet address can be done by reading records in an existing database, and the map appears to be just a list of credit card transactions, so each step can be performed in the human mind.

The other claim at issue was a Beauregard claim, which was directed to a computer readable medium containing program instructions for executing the method of the claim discussed above. The patentee argued that this claim is a manufacture, rather than a process under section 101. The Federal Circuit disagreed, and stated that "regardless of the statutory category ... a claim's language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes." Here, the claim was for a method of detecting credit card fraud, not a manufacture for storing computer-readable information. Programming a general purpose computer to perform an algorithm creates a new machine -- a special purpose computer programmed to perform particular functions. But simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind does not render eligibility. So despite the Beauregard format, this claim was treated as a process claim. The use of a machine must impose meaningful limits on the claim's scope and not be incidental to performing a mental process.

Because this case closely follows the guidelines set forth in Bilski v. Kappos, it is unlikely that the U.S. Patent & Trademark Office will change their approach to examination. When relying on the machine prong of the machine-or-transformation test, however, it may be helpful to draft method claims to more explicitly recite the use of the machine in the steps. Had CyberSource's claims recited how the Internet address was obtained using a computer or how the Internet was involved in the method, then the outcome might have been different.