The US Court of Appeals for the Federal Circuit affirmed a district court determination that claims of several patents were patent ineligible under 35 U.S.C. § 101 because they did not recite an innovation with sufficient specificity to constitute an improvement to computer functionality. Universal Secure Registry LLC v. Apple Inc., Case No. 20-2044 (Fed. Cir. Aug. 26, 2021) (Stoll, J.)

Universal Secure Registry (USR) sued Apple, Visa and Visa U.S.A. (collectively, Apple), asserting four patents directed to securing electronic payment transactions, which USR alleged allowed for making credit card transactions “without a magnetic-stripe reader and with a high degree of security” (e.g., allegedly Apple Pay or Visa Checkout). Apple moved to dismiss the complaint under Fed. R. Civ. Pro. 12(b)(6), arguing that the asserted patents claimed patent-ineligible subject matter under 35 U.S.C. § 101. The Delaware magistrate judge, quoting Visual Memory v. NVIDIA (Fed. Cir. 2017), determined that all the representative claims were directed to a non-abstract idea because “the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.”

The district court judge disagreed, concluding that the representative claims failed at both Alice steps, and granted Apple’s motion to dismiss. The district court found that the claimed invention was directed to the abstract idea of “the secure verification of a person’s identity,” and that the patents did not disclose an inventive concept—including an improvement in computer functionality—that transformed the abstract idea into a patent-eligible application. USR appealed.

In assessing the claims under the Alice two-part test, the Federal Circuit noted that in cases involving authentication technology, patent eligibility often turns on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself. For example, in its 2017 decision in Secured Mail Solutions v. Universal Wilde, the Court (at Alice step one), held that claims directed to using a conventional marking barcode on the outside of a mail object to communicate authentication information were abstract because they were not directed to specific details of the barcode, how it was processed or generated or how it was different from long-standing identification practices. Similarly, in its 2020 decision in Prism Technologies v. T-Mobile, where the claims broadly recited “receiving” identity data of a client computer, “authenticating” the identity of the data, “authorizing” the client computer and “permitting access” to the client computer, the Court held at Alice step one that the claims were directed to the abstract idea of “providing restricted access to resources,” not to a “concrete, specific solution.” At step two, the Court determined that the asserted claims recited conventional generic computer components employed in a customary manner such that they were insufficient to transform the abstract idea into a patent-eligible invention.

The claims in issue fared similarly. The district court held that the representative claim was not materially different from the Prism claims, and the Federal Circuit agreed. Although the [...]

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