Following the Federal Circuit Bilski decision, which instituted the machine or transformation test, Beaureguard claims, claims in which software is claimed in terms of a computer usable medium having computer readable code embodied therein, suffered a setback in Cybersource Corporation v. Retail Decisions Inc., a decision of the federal District Court for the Northern District of California.

In Cybersource, Judge Patel invalidated the Beaureguard claims using the machine or transformation test, which has now been relegated to just a clue by the Supreme Court’s Bilski decision. The Supreme Court decision on Bilski effectively did away with the rationale for invalidating the Beaureguard claims in Cybersource. Not only were the Beaureguard claims invalidated, but Judge Patel questioned Beaureguard’s heritage as a patentability opinion. It is true that luck was not kind to Beaureguard. When the case that gave the claims their name, In re Beaureguard, reached the Federal Circuit, the Federal Circuit had just decided In re Lowry and the USPTO had to accept claiming a database in terms of a computer usable medium. In view of In re Lowry, the USPTO stated that they shared the petitioner’s (Beaureguard’s) view that a “computer program embodied in a tangible medium, such as floppy diskettes,” was patentable subject matter. Since there was no case or controversy, (as required for Article III courts) that was the end of the case. Upstaged by Lowry, Beaureguard became the littlest case that ever that was not, a thirteen line order stating that there was no case or controversy. It does not matter that Beaureguard claims have been a successful export, having been accepted by the EPO (which does not have a strong taste for software claims). One day in March of 2009, Beaureguard’s standing as a patentatibility opinion was questioned, but now the Supreme Court has downgraded the machine or transformation test to only a clue, making it harder to invalidate a method claim. Since a Beaureguard claim looks like a relative of a method claim, the downgrading of the machine or transformation test should make them less susceptible to invalidation at District Court. Last week, the Federal Circuit in Finjan, Inc. v. Secure Computing Corp, affirmed a District Court decision for infringement of the data storage, or Beaureguard claims, while the method claims were not infringed. That opinion shows the usefulness of the “Beauregard” claims. The Cybersource decision has been appealed, and in early December the Federal Circuit will receive the appellant’s brief for the appeal on Cybersource. There are some that hope that, when the Federal Circuit hears Cybersource, the Federal Circuit will take the opportunity to make an “honest case” out of Beaureguard.