US Court of Appeals Limits Application of In Re Bilski Case

A case in the US Court of Appeals for the Federal Circuit decided August 16, 2011 (Case No 2009-1358), Cybersource Corporation v Retail Decisions, Inc, is a recent application of the business method patent test outlined in last year's US Supreme Court case Bilski v Kappos. The decision in CyberSource adds clarity to the limits of patentability of business method patents following Bilski, particularly the application of the machine prong of the machine-or-transformation test. The US Court of Appeals affirmed the lower court's decision holding that CyberSource's process patent was unpatentable subject matter and therefore invalid. CyberSource had developed a process that uses IP address information (IP address, MAC address, e-mail address, etc) to improve detection of credit card fraud in online purchases. The process uses a computer program to obtain IP address information relating to an online credit card transaction and compares this information to IP address information obtained from past purchases with the same credit card. If the two sets of information were inconsistent, the system would red-flag the transaction. The issues in the case were narrowed to claims 2 and 3 of CyberSource's patent. Claim 3 claimed the process described above and claim 2 claimed computer readable medium containing the instructions for executing the process in claim 3. Both claims were held to be mere mental processes and therefore unpatentable subject matter. The court relied largely on the machine-or-transformation test stating that the claims did not describe a process that transformed an article into a different state or thing or a process that required the use of a machine. Regarding the machine prong of the test, much was made by the court that the claimed process could be performed by a human using a simple pen and paper without the involvement of a machine. For more commentary, visit: http://tinyurl.com/3nzwakj Summary by: Thomas Wong