The U.S. Court of Appeals for the Federal Circuit held that the patent-eligible subject matter is determined based on the underlying invention, regardless of the statutory category literally invoked by the claim language.  CyberSource Corp. v. Retail Decisions, Inc., Case No. 2009-1358 (Fed. Cir., Aug. 16, 2011) (Dyk, J.).

CyberSource appealed from a decision of the district court granting summary judgment of invalidity of claims 2 and 3 of U.S. Patent Number 6,029,154 (the ’154 patent) for failure to recite patent-eligible subject matter under 35 U.S.C. §101.  Claim 3 recites a process for verifying the validity of credit card transactions over the Internet and claim 2 recites a computer readable medium containing program instructions for executing the same process.

Claim 3 states the following:    

             “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 transaction and;

             c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.”

Applying the Bilski “machine-or-transformation” test, the Federal Circuit stated that process claim 3 would be patent-eligible under §101 if it is tied to a particular machine or apparatus or if it transforms a particular article into a different state or thing.  The Federal Circuit found that claim 3 does not require the process to be performed by a machine and does not transform a particular article into a different state or thing.  Thus, the Federal Circuit held that claim 3 is not drawn to a patent-eligible subject matter.

Turning to claim 2, the Court rejected CyberSource’s main argument that claim 2 recites a patent-eligible subject matter per se because it recites a “manufacturer” rather than a “process,” under the statutory language of §101.  The Federal Circuit found as follows:

“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.”

The Federal Circuit therefore treated claim 2 as a process claim, and, similar to claim 3, analyzed claim 2 under the machine-or-transformation test.  CyberSource argued that “claim 2 satisfies the machine prong of the machine-or-transformation test, since the recited ‘computer readable medium’ contains software instructions that can only be executed by ‘one or more processors of a computer system.’”  The Federal Circuit disagreed, holding that “incidental use of a computer to perform the mental process of claim 3 does not impose a sufficiently meaningful limit on the claim’s scope.”  As such, the Federal Circuit concluded that the “computer readable medium” recitation of claim 2 does not make otherwise unpatentable subject matter patentable.