District Court docket Finds Cell Fee Patents Not Invalid Below 35 U.S.C. § 101


In Cell Fairness Corp. v. Walmart Inc., 2-21-cv-00126 (EDTX Sep. 8, 2022) (Roy S. Payne), the Court docket discovered that the asserted claims weren’t directed in the direction of an summary concept and didn’t embody unpatentable subject material and due to this fact weren’t invalid beneath 35 U.S.C § 101.

Pursuant to 35 U.S.C § 101, “whoever invents or discovers any new and helpful course of, machine, manufacture, or composition of matter, or any new and helpful enchancment thereof, could acquire a patent therefor, topic to the circumstances and necessities of this title.” A declare falls exterior of 35 U.S.C § 101 the place (1) it’s directed to a patent-ineligible idea, i.e., a legislation of nature, pure phenomenon, or summary concept, and (2), in that case, the actual parts of the declare, thought-about each individually and as an ordered mixture, don’t add sufficient to rework the character of the declare right into a patent-eligible utility.

And particularly, in circumstances involving enhancements to computing expertise and networks, the Federal Circuit has recognized “two inquiries of significance right here: [1] whether or not the main target of the claimed advance is on an answer to an issue particularly arising within the realm of pc networks or computer systems; and [2] whether or not the declare is correctly characterised as figuring out a particular enchancment in pc capabilities or community performance, fairly than solely claiming a fascinating consequence or operate.”

On this case, the patents at problem relate to “digital commerce and extra notably to utilizing cell communication gadgets to execute a business transaction.”

Plaintiff Cell Fairness argued that the asserted claims are eligible at Step 1 as a result of the claims are directed to a particular enchancment addressing an issue arising within the realm of pc networks, particularly cell fee networks. Defendant Walmart argued that the asserted claims: (1) are directed to an financial downside associated to monetary transactions, not a technical downside; (2) in the event that they handle a technical downside, they fail to supply a particular resolution as a result of they resemble different claims discovered ineligible or depend on standard strategies and {hardware}; or (3) merely automate a human exercise.

Turning to Step 1, the Court docket famous the “directed to” inquiry begins by asking “what the patent asserts to be the ‘focus of the claimed advance over the prior artwork.’” For patents associated to pc networks or computer systems, just like the asserted patents right here, the primary query in figuring out whether or not the asserted advance over the prior artwork is directed in the direction of eligible topic is to find out “whether or not the main target of the claimed advance is on an answer to an issue particularly arising within the realm of pc networks or computer systems.”

Cell Fairness argued that the claimed advance addresses an issue arising from pc networks, particularly the safety of cell fee transactions. Based on Cell Fairness, the specification of the asserted patents identifies safety of cell transactions as a difficulty the patents search to unravel. Thus, Cell Fairness argued that, as a result of cell fee networks are pc networks and the asserted patents handle a difficulty associated to those networks, the asserted patents handle an issue arising within the realm of pc networks. Walmart responded by arguing the issue recognized by Cell Fairness is essentially a enterprise downside, fairly than an issue that’s particularly arising within the realm of pc networks or computer systems.

Nonetheless, the Court docket discovered that the asserted patents are addressing an issue arising within the realm of pc networks, which is said to the issue of safety as argued by Cell Fairness. Particularly, the Court docket discovered that Declare 1 addresses the issue of find out how to enable a buyer to make use of a cell communications gadget to provoke and execute a transaction that happens over a cell fee community. The Court docket additionally famous that this discovering is in step with the Court docket’s declare building, the place the Court docket discovered that “Declare 1 of every patent is directed to the steps previous and together with initiating the transaction, which is in step with how the patent describes the development over the prior artwork.”

Thus, the Court docket concluded that the asserted patents are addressing the issue of find out how to enable a buyer to make use of a cell communications gadget to provoke and execute a transaction that happens over a cell fee community, with out having to depend upon the presence and even the existence of a bank card, all of which will increase the safety of the method.

Subsequent, Cell Fairness argued that the claims are drawn to a particular new “reverse” software program structure that may be a particular enchancment to the operation of merchant-payment networks.  Walmart argued that the reverse movement shouldn’t be a particular resolution as a result of the declare (1) resembles claims deemed ineligible at Step 1 by the Federal Circuit and (2) the claims depend on generic pc {hardware} and functionally-claimed limitations, thus not a particular resolution. The Court docket discovered Walmart’s first argument unpersuasive as a result of the asserted patents clearly purport to unravel an issue with the “standard methodology” of initiating transactions. The Court docket additionally discovered Walmart’s second argument unpersuasive as a result of the Court docket finds that the asserted patents are directed to non-abstract enhancements to the functioning of cell fee networks.

Thus, the Court docket discovered that the asserted claims are directed to reversing the standard transaction movement, and thus permitting a buyer’s cell gadget to provoke a cell fee transaction. It is a particular enchancment in fee community performance. Due to this fact, the Court docket discovered the asserted claims are eligible at Step 1 as they’re directed to eligible subject material. And, as a result of the Court docket discovered the asserted claims eligible at Step 1, the Court docket didn’t handle Step 2.

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