Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 1 of 26 PageID #: 340
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`Civil Action No. 17-585-VAC-MPT
`
`
`UNIVERSAL SECURE REGISTRY, LLC,
`
`
`Plaintiff,
`
`JURY TRIAL DEMANDED
`
`
`
`vs.
`
`APPLE INC., VISA INC., and VISA U.S.A., INC.,
`
`
`Defendants.
`
`Fredrick L. Cottrell, III (#2555)
`Jason J. Rawnsley (#5379)
`RICHARDS LAYTON, & FINGER, P.A.
`920 North King Street
`Wilmington, DE 19801
`(302) 651-7700
`cottrell@rlf.com
`rawnsley@rlf.com
`
`Attorneys for Defendant Apple Inc.
`
`OF COUNSEL
`
`Mark D. Selwyn
`WILMER CUTLER PICKERING
` HALE & DORR LLP
`950 Page Mill Road
`Palo Alto, CA 94304
` (650) 858-6000
`
`
`DEFENDANTS’ OPENING BRIEF IN SUPPORT OF
`THEIR MOTION TO DISMISS PLAINTIFF’S COMPLAINT
`
`David E. Moore (#3983)
`Bindu A. Palapura (#5370)
`POTTER ANDERSON & CORROON LLP
`Hercules Plaza, 6th Floor
`1313 N. Market Street
`Wilmington, DE 19801
` (302) 984-6000
`dmoore@potteranderson.com
`bpalapura@potteranderson.com
`
`Attorneys for Defendants Visa Inc. and
`Visa U.S.A., Inc.
`
`OF COUNSEL:
`
`James C. Yoon
`Jamie Y. Otto
`WILSON SONSINI GOODRICH & ROSATI
`650 Page Mill Road
`Palo Alto CA 94304
`(650) 320-4726
`
`
`
`Monica Grewal
`WILMER CUTLER PICKERING
` HALE & DORR LLP
`60 State Street
`Boston, MA 02109
`(202) 663-6000
`
`
`
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 2 of 26 PageID #: 341
`
`
`
`Derek A. Gosma
`WILMER CUTLER PICKERING
` HALE & DORR LLP
`350 South Grand Avenue, Suite 2100
`Los Angeles, CA 90071
`derek.gosma@wilmerhale.com
`(213) 443-5300
`
`Dated: August 25, 2017
`
`
`
`
`
`ii
`
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 3 of 26 PageID #: 342
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`
`
`
`TABLE OF CONTENTS
`
`TABLE OF AUTHORITIES .......................................................................................................... ii
`
`I.      NATURE AND STAGE OF THE PROCEEDINGS .............................................................. 1 
`
`II. SUMMARY OF ARGUMENT .............................................................................................. 1 
`
`III. STATEMENT OF FACTS ..................................................................................................... 2 
`
`IV. ARGUMENT .......................................................................................................................... 6 
`
`A.  Legal Standard .................................................................................................................... 6 
`
`B.  The ’539 Patent Claims Ineligible Subject Matter. ............................................................. 8 
`
`C.  The ’826 Patent Claims Ineligible Subject Matter. ........................................................... 13 
`
`D.  The ’137 Patent Claims Ineligible Subject Matter. ........................................................... 16 
`
`E.  The ’813 Patent Claims Ineligible Subject Matter. ........................................................... 18 
`
`V.  CONCLUSION ..................................................................................................................... 20 
`
`
`
`
`
`
`
`iii
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`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 4 of 26 PageID #: 343
`
`
`
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Accenture Global Servs., GmbH v. Guidewire Software, Inc.,
`
`728 F.3d 1336 (Fed. Cir. 2013)............................................................................................8, 12
`
`Affinity Labs of Tex., LLC v. DIRECTV, LLC,
`
`838 F.3d 1253 (Fed. Cir. 2016)..................................................................................................7
`
`Alice Corp. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014) ..................................................................................................... passim
`
`
`Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can. (U.S.),
`
`687 F.3d 1266 (Fed. Cir. 2012) ...............................................................................................12
`
`Becton, Dickinson & Co. v. Baxter Int’l, Inc.,
`
`127 F. Supp. 3d 687 (W.D. Tex. 2015) ......................................................................................8
`
`
`Bilski v. Kappos,
`
`561 U.S. 593 (2010) .....................................................................................................6, 8, 9, 17
`
`Blue Spike, LLC v. Google Inc.,
` No. 14-CV-01650-YGR, 2015 WL 5260506 (N.D. Cal. Sept. 8, 2015) ...........................10, 12
`
`buySAFE, Inc. v. Google, Inc.,
`
`765 F.3d 1350 (Fed. Cir. 2014)..................................................................................2, 9, 11, 14
`
`Content Extraction & Transmission, LLC v. Wells Fargo Bank, Nat’l Ass’n,
`
`776 F.3d 1343 (Fed. Cir. 2014)..................................................................................................8
`
`CyberSource Corp. v. Retails Decisions Inc.,
`
`654 F.3d 1366 (Fed. Cir. 2011)................................................................................7, 10, 12, 16
`
`Digitech Image Techs., LLC v. Elecs. for Imaging, Inc.,
`
`758 F.3d 1344 (Fed. Cir. 2014) .........................................................................................17, 19
`
`Elec. Power Grp., LLC v. Alstom S.A.,
`
`830 F.3d 1350 (Fed. Cir. 2016)..................................................................................................7
`
`Intellectual Ventures I LLC v. Capital One Bank (USA), N.A.,
`
`792 F.3d 1363 (Fed. Cir. 2015)..................................................................................................7
`
`Intellectual Ventures I LLC v. Erie Indem. Co.,
`
`850 F.3d 1315 (Fed. Cir. 2017)................................................................................7, 11, 12, 19
`
`iv
`
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 5 of 26 PageID #: 344
`
`
`
`
`Intellectual Ventures I LLC v. Symantec Corp.,
`
`838 F.3d 1307 (Fed. Cir. 2016)..................................................................................................1
`
`IQS US Inc. v. Calsoft Labs Inc.,
` No. 16-CV-7774, 2017 WL 3581162 (N.D. Ill. Aug. 18, 2017) ......................................14, 15
`
`Joao Bock Transaction Sys., LLC v. Jack Henry & Assocs., Inc.,
`
`76 F. Supp. 3d 513 (D. Del. 2014) .....................................................................................10, 14
`
`Jericho Sys. Corp. v. Axiomatics, Inc.,
` No. 14-cv-2281, 2015 WL 2165931 (N.D. Tex. May 7, 2015) ................................................9
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`
`566 U.S. 66 (2012) ...............................................................................................................8, 14
`
`Mortgage Grader, Inc. v. First Choice Loan Servs. Inc.,
`
`811 F.3d 1314 (Fed. Cir. 2016)................................................................................................12
`
`OIP Techs., Inc. v. Amazon.com, Inc.,
`
`788 F.3d 1359 (Fed. Cir. 2015)..................................................................................................1
`
`Pragmatus Telecom, LLC v. Genesys Telecomms. Labs., Inc.,
`
`114 F. Supp. 3d 192 (D. Del. 2015) ...........................................................................................1
`
`SiRF Tech., Inc. v. Int'l Trade Comm'n,
`
`601 F.3d 1319 (Fed. Cir. 2010)................................................................................................13
`
`Synopsys, Inc. v. Mentor Graphics Corp.,
`
`839 F.3d 1138 (Fed. Cir. 2016)........................................................................................7, 9, 10
`
`Tenon & Groove, LLC v. Plusgrade S.E.C.,
` No. 12-cv-1118, 2015 WL 82531 (D. Del. Jan. 6, 2015) ........................................................13
`
`Versata Dev. Grp., Inc. v. SAP Am., Inc.,
`
`793 F.3d 1306 (Fed. Cir. 2015)..................................................................................................6
`
`Walker Digital, LLC v. Google, Inc.,
`
`66 F. Supp. 3d 501 (D. Del. 2014) ...........................................................................................17
`
`Other Authorities
`
`35 U.S.C. § 101 ................................................................................................................................6
`
`
`
`v
`
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 6 of 26 PageID #: 345
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`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
`
`This action was filed on May 21, 2017. Plaintiff has asserted infringement of U.S. Patent
`
`Nos. 8,856,539 (“’539 patent”), 9,530,137 (“’137 patent”), 9,100,826 (“’826 patent”), and
`
`8,577,813 (“’813 patent”). The asserted patents are exhibits A-D to the Complaint. (D.I. 1.)
`
`Defendants have moved to dismiss under Fed. R. Civ. P. 12(b)(6) because all asserted claims are
`
`invalid under 35 U.S.C. § 101.1 This is Defendants’ Opening Brief in support of that motion.
`
`II.
`
`
`
`SUMMARY OF ARGUMENT
`
`Verification of an account holder’s identity before allowing access to her or his account
`
`to enable a transaction is a practice as old as banking and commerce itself. Whether by use of
`
`confidential information, or simply by recognizing a person’s physical characteristics, financial
`
`institutions and merchants have always needed a way to confirm that the person seeking to
`
`access an account is entitled to do so. For example, financial institutions have long required
`
`customers to recite social security numbers, birth dates, and other personal information before
`
`discussing account information over the telephone. Similarly, presentation of photo
`
`identification to the bank teller has long been a prerequisite for making an account withdrawal.
`
`The law is now well settled that the combination of such a longstanding and fundamental
`
`economic practice with nothing more than conventional computer, network, and database
`
`technology is ineligible for patent protection under 35 U.S.C. § 101. See, e.g., Alice Corp. v.
`
`CLS Bank Int’l, 134 S. Ct. 2347, 2356 (2014) (computerized method for “exchanging financial
`
`obligations” found invalid); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1314
`
`
`1 The Federal Circuit has held that invalidity under § 101 can be properly adjudicated on a
`motion to dismiss. See, e.g., OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1364 (Fed.
`Cir. 2015) (affirming motion to dismiss because patents did not claim eligible subject matter);
`see also Pragmatus Telecom, LLC v. Genesys Telecomms. Labs., Inc., 114 F. Supp. 3d 192, 204
`(D. Del. 2015) (granting in part motion to dismiss for failure to claim patent-eligible subject
`matter).
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 7 of 26 PageID #: 346
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`
`
`(Fed. Cir. 2016) (computerized method for classifying emails in a database invalid); buySAFE,
`
`Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (computerized system for third party
`
`guarantee for a sales transaction invalid).
`
`
`
`The claims of the four patents-in-suit recite nothing more than that patent ineligible
`
`subject matter. All are directed to the abstract concept of using an “identification system” called
`
`a “Universal Secure Registry” (“USR”) to verify an account holder’s identity based on codes
`
`and/or information related to the account holder before enabling a transaction. And rather
`
`than claim any technological improvement in the computer, database, or network for identifying
`
`an account holder, the claims implement this abstract concept using wholly conventional
`
`computer technology in conventional ways. The patent describes the USR, for example, as an
`
`“information system” (e.g., ‘539 patent at 5:30) comprising “any kind of database” (e.g., ‘539
`
`patent at 6:18) that can contain data such as a user’s credit card number, medical records, and
`
`other sensitive information. (Id. at 3:44-63.) The claims therefore do not contain any inventive
`
`concept sufficient to transform the abstract idea into patent eligible subject matter. Because
`
`these patents do not claim eligible subject matter, this action should be dismissed pursuant to
`
`Fed. R. Civ. P. 12(b)(6).
`
`III.
`
`STATEMENT OF FACTS
`
`Titled “Universal Secure Registry” (’539 and ’813 patents), and “Method and Apparatus
`
`for Secure Access Payment and Identification” (’137 and ’826 patents), the asserted patents
`
`name the same inventor, Kenneth Weiss, and share large portions of their specifications,
`
`including the entirety of the first 17 figures and their descriptions. The patents all describe a
`
`secure database called a “Universal Secure Registry,” which is “a universal identification system
`
`and/or used to selectively provide personal, financial or other information about a person to
`
`authorized users.” (’813 patent at 3:66-4:1.) The patents state that the USR database is designed
`2
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`
`

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`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 8 of 26 PageID #: 347
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`
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`to “take the place of conventional forms of identification” when conducting financial
`
`transactions to minimize the incidence of fraud. (E.g., ’539 patent at 3:22-24.) The patents state
`
`that various forms of information can be stored in the database to verify a user’s identity and
`
`prevent fraud: (1) algorithmically generated codes, such as a time-varying multicharacter code or
`
`an “uncounterfeitable token,” (2) “secret information” like a PIN or password, and/or (3) a user’s
`
`“biometric information,” such as fingerprints, voice prints, an iris or facial scan, DNA analysis,
`
`or even a photograph. (See ’539 patent at 4:4-12, Fig 3; ’826 patent at 14:36-49; ’137 patent at
`
`14:54-67; ’813 patent at 13:9-22.) The patents do not, however, describe any new technology for
`
`generating or capturing such information.
`
`Instead, the patents emphasize that the USR database can be implemented in “a general-
`
`purpose computer system” using “a commercially available microprocessor” running “any
`
`commercially available operating system.” (’539 patent at 5:63-6:17; ’813 patent at 10:1-23; see
`
`’137 patent at 11:46-12:46; ’826 patent at 11:30-12:30.) The alleged invention is also “not
`
`limited to a particular computer platform, particular processor, or particular high-level
`
`programming language.” (’539 patent 6:51-53; ’826 patent at 12:18-20; ’137 patent at 12:34-37;
`
`’813 patent at 10:58-60.) The USR database itself “may be any kind of database” and
`
`communication with the database may take place over “any [network] protocol.” (’539 patent at
`
`6:18-20, 7:12-22, Fig 1; ’826 patent at 11:52-54; ’137 patent at 12:1-3; ’813 patent at 10:24-26.)
`
`This generic database is encrypted using known methods, and may be accessed by providing
`
`information sufficient to verify the user’s identity. (’539 patent at 3:5-12; ’826 patent at 3:63-
`
`4:3; ’137 patent at 4:11-15; ’813 patent at 3:65-4:5.)
`
`The complaint identifies one claim of each patent as “exemplary” of all other claims:
`
`’539 patent claim 22, ’137 patent claim 12, ’826 patent claim 10, and ’813 patent claim 1. Claim
`
`3
`
`
`

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`22 of the ’539 patent, which tracks Figure 8 (shown below), is a “method for providing
`
`information to a provider (merchant) to enable transactions between the provider and entities
`
`(purchaser) that have secure data stored in a [USR] in which each entity is identified by a time-
`
`varying multicharacter code.” (’539 patent at 20:4-8.) The claimed method includes six steps
`
`(described at ’539 patent at 12:19-54): (1) the database receives a request (e.g., from a merchant)
`
`that includes the “time-varying multicharacter code” for the entity (e.g., a credit card customer)
`
`whose account data is stored in the USR (804); (2) comparing and matching the time varying
`
`multicharacter code for that customer with a time varying multicharacter code stored in the
`
`database (806); (3) determining whether the merchant is in compliance with any access
`
`restrictions on that customer’s account (806); (4) accessing the relevant information regarding
`
`the customer’s account if the merchant is in compliance (808); (5) providing the customer’s
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`account identifying information (e.g., credit card account number) to a third party that will
`
`determine whether to authorize the transaction (808); and (6) authorizing or declining the
`
`transaction without providing the credit card account number to the merchant (810/812/814).
`
`4
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`

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`
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`The ’826, ’137, and ’813 patents claim different combinations of these elements and
`
`other generic components. Claim 10 of the ’826 patent, a method claim, adds the limitation that
`
`the method be performed using a wireless-capable “handheld device” and requires the use of
`
`“biometric information” to identify the user’s account information rather than a time-varying
`
`multicharacter code. (’826 patent at 1:59-61.) The claim also requires a generic “second
`
`authentication information” (i.e., some other piece of information used to identify and verify the
`
`account). Claim 12 of the ’137 patent, a system claim, specifies use of wireless transmission and
`
`a biometric sensor in addition to “a time-varying value” and additional “secret information” as
`
`part of the authentication process. (See ’137 patent at 5:60-6:3, Fig. 21.) Finally, claim 1 of the
`
`’813 patent, an apparatus claim for an “electronic ID device,” adds limitations to a “user
`
`interface” and communication with a generic Point-of-Sale (“POS”) terminal. (’813 patent at
`
`5
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`
`

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`
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`7:4-7 (secret information), 10:41-57 (user interface), 50:23-28, 51:7-26 (POS Terminal), Fig.
`
`31.)
`
`IV. ARGUMENT
`
`A.
`
`Legal Standard
`
`Under Section 101 of the Patent Act, “[w]hoever invents or discovers any new and useful
`
`process, machine, manufacture, or composition of matter, or any new and useful improvement
`
`thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35
`
`U.S.C. § 101. Although Congress intended these terms to be “expansive,” the Supreme Court
`
`has recognized that “laws of nature, physical phenomena, and abstract ideas” are not patent-
`
`eligible. Bilski v. Kappos, 561 U.S. 593, 601 (2010).
`
`In Alice, 134 S. Ct. 2347, the Supreme Court raised the bar for establishing subject-matter
`
`eligibility for computer-implemented inventions, unanimously affirming the judgment of the
`
`Federal Circuit invalidating claims directed toward computer-based schemes to manage
`
`“settlement risk” in financial transactions through the use of intermediated settlement. Id. at
`
`2352. The Court confirmed that, in light of “the ubiquity of computers,” limiting a claim
`
`covering an abstract concept to a “wholly generic computer implementation” is insufficient to
`
`transform the idea into a patent-eligible invention. Id. at 2358. The decision therefore serves as
`
`a clear mandate to invalidate patents that claim fundamental economic practices implemented on
`
`a computer.
`
`The Federal Circuit and district courts have taken this mandate seriously, having applied
`
`these principles to invalidate many patent claims directed to “fundamental” practices performed
`
`with conventional computer technology and/or over a network. See, e.g., Versata Dev. Grp., Inc.
`
`v. SAP Am., Inc., 793 F.3d 1306, 1336 (Fed. Cir. 2015) (holding invalid a computerized method
`
`for pricing products); Intellectual Ventures I LLC v. Capital One Bank (USA), N.A., 792 F.3d
`
`6
`
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 12 of 26 PageID #: 351
`
`
`
`1363, 1373 (Fed. Cir. 2015) (holding invalid patents claiming online budgeting tool and method
`
`for customizing web pages for a target audience). The Federal Circuit has also found that patent
`
`claims are unpatentable where they can be performed “entirely in the human mind.” Synopsys,
`
`Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1146–47 (Fed. Cir. 2016) (“[W]e continue to
`
`‘treat[] analyzing information by steps people go through in their minds, or by mathematical
`
`algorithms, without more, as essentially mental processes within the abstract-idea category.’”)
`
`(citing Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016) (collecting
`
`cases)); CyberSource Corp. v. Retails Decisions Inc., 654 F.3d 1366, 1367 (Fed. Cir. 2011)
`
`(finding invalid a “method and system for detecting fraud in a credit card transaction . . . over the
`
`internet” as an abstract mental process).
`
`Alice articulates a two-step framework for determining when a patent claims patent-
`
`ineligible abstract ideas. In step one, the court must determine whether the claims at issue are
`
`directed to a patent-ineligible abstract concept. To determine whether the claim is “directed to”
`
`an abstract idea, the court must determine the “focus of the claimed advance over the prior art”—
`
`that is, what is the “character [of the claim] as a whole.” Intellectual Ventures I LLC v. Erie
`
`Indem. Co., 850 F.3d 1315, 1325 (Fed. Cir. 2017) (quoting Affinity Labs of Tex., LLC v.
`
`DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016)). Where the “character of the claim”
`
`pertains to a longstanding economic practice that predates computers, the claim is directed to an
`
`abstract idea and fails Alice step 1. See id. at 1327.
`
`If the claim is directed to an abstract idea, the court proceeds to step two. In step two of
`
`the analysis, the court must search for an “inventive concept” in the claim outside of the
`
`underlying abstract idea—i.e., “an element or combination of elements that is ‘sufficient to
`
`ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible
`
`7
`
`
`

`

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`
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`concept] itself.’”2 Alice, 134 S. Ct. at 2355 (alteration in original) (quoting Mayo Collaborative
`
`Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72–73 (2012)). A patentee cannot circumvent the
`
`prohibition on patenting abstract ideas by limiting the idea to “a particular technological
`
`environment,” nor by adding “insignificant postsolution activity,” Bilski, 561 U.S. at 610–11
`
`(internal quotation marks omitted), or “well-understood, routine, conventional” features, Mayo,
`
`566 U.S. at 79–80. Importantly, “the mere recitation of a generic computer cannot transform a
`
`patent-ineligible abstract idea into a patent-eligible invention.” Alice, 134 S. Ct. at 2358.
`
`B.
`
`The ’539 Patent Claims Ineligible Subject Matter.
`
`Application of Alice’s two-step analysis demonstrates that the claims of the ’539 patent
`
`recite patent ineligible subject matter.
`
`ALICE STEP ONE. As detailed below, the focus of exemplary claim 22 is verifying an
`
`account holder’s identity with a code3 before enabling a transaction. Verifying the identity of an
`
`account holder by use of a code is a “fundamental economic practice” dating back as long as
`
`banking and commerce have existed. Therefore, the patent claims an unpatentable abstract
`
`concept. Alice, 134 S. Ct. at 2356–57; Bilski, 561 U.S. at 611.
`
`The preamble of claim 22 states that the claim is directed to the abstract idea of verifying
`
`2 In performing this analysis, courts need not analyze each and every claim with the same degree
`of precision. “Having thoroughly reviewed the ’887 Patent and all of its associated claims, the
`court agrees with Baxter that Claim 1 is representative. Where claims are ‘substantially similar
`and linked to the same abstract idea,’ the court may dispose of the other claims in the patent with
`less detail.” Becton, Dickinson & Co. v. Baxter Int’l, Inc., 127 F. Supp. 3d 687, 689 n.3 (W.D.
`Tex. 2015), aff’d, 639 F. App’x 652 (Fed. Cir. 2016) (citing Content Extraction & Transmission,
`LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1348 (Fed. Cir. 2014)); see also Bilski,
`561 U.S. at 612 (determining that eleven claims in a patent application were invalid after only
`analyzing two claims in detail); Accenture Global Servs., GmbH v. Guidewire Software, Inc.,
`728 F.3d 1336, 1344–45 (Fed. Cir. 2013) (invalidating systems claims that were similar to
`method claims already held to be invalid). In this case, USR alleges that the claims discussed
`herein are “exemplary” of all claims in each respective patent. (D.I. 1 at ¶¶ 43, 65, 84, 106.)
`3 The ’539 claims do not recite the use of “secret information” or “biometric information” like
`the other patents and therefore do not claim verification based on “information related to an
`account holder.”
`
`8
`
`
`

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`Case 1:17-cv-00585-JFB-SRF Document 17 Filed 08/25/17 Page 14 of 26 PageID #: 353
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`
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`an account holder’s identity with a code before enabling a transaction. See ’539 patent cl. 22 (“A
`
`method for providing information to a provider to enable transactions between the provider and
`
`entities who have secure data stored in a secure registry in which each entity is identified by a
`
`time-varying multicharacter code.”). The six method steps that follow are likewise focused on
`
`performing this task. See supra at 4-5 (setting forth the steps of claim 22).
`
`Similar claims have been found directed to an abstract idea at Alice step 1 in numerous
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`Supreme Court and Federal Circuit decisions. For example, in Alice, the Supreme Court found
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`abstract a patent directed to “exchanging financial obligations between two parties using a third-
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`party intermediary to mitigate settlement risk.” Alice, 134 S. Ct. at 2356–57. Specifically, the
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`patent created a database of “shadow records” tracking the transacting party’s account balances
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`in real time and only allowing further transactions if sufficient funds were available. Id. at 2352.
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`The Court reasoned that tracking of these transactions by a third party was “a fundamental
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`economic practice” and therefore was abstract. Id. at 2356; see also Bilski, 561 U.S. at 611
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`(“fundamental economic practice” of hedging risk in commodities market found invalid);
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`buySAFE, 765 F.3d at 1354–55 (invalidating claims to computerized system for third party
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`guarantee for a sales transaction under §101); Jericho Sys. Corp. v. Axiomatics, Inc., No. 14-cv-
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`2281, 2015 WL 2165931, at *4 (N.D. Tex. May 7, 2015) (“This is an abstract idea. The abstract
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`idea being that people who meet certain requirements are allowed to do certain things.”), aff’d,
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`642 F. App’x 979 (Fed. Cir. 2016).
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`The claimed verification method is also directed to an abstract concept for the additional
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`reason that the claim recites nothing more than a mental process. Synopsys, 839 F.3d at 1145
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`(“claims … directed to a mental process [are] a subcategory of unpatentable abstract ideas”
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`under Alice) (internal quotation marks omitted). For example, a person in possession of a
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`spreadsheet containing the same information as the USR could perform the same comparison
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`between a received code and an expected code to determine whether to grant a particular user
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`access to sensitive data and give it to a third party. See Blue Spike, LLC v. Google Inc., No. 14-
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`CV-01650-YGR, 2015 WL 5260506, at *5–6 (N.D. Cal. Sept. 8, 2015) (claims “generally
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`directed to the abstract concept of comparing one thing to another” using a computer are patent-
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`ineligible), aff'd, 669 F. App’x 575 (Fed. Cir. 2016), cert. denied, 137 S. Ct. 2246 (2017);
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`CyberSource, 654 F.3d at 1367 (finding invalid a “method and system for detecting fraud in a
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`credit card transaction . . . over the Internet” as an abstract mental process); Joao Bock
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`Transaction Sys., LLC v. Jack Henry & Assocs., Inc., 76 F. Supp. 3d 513 (D. Del. 2014), aff’d,
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`803 F.3d 667 (Fed. Cir. 2015) (finding patents claiming computer-implemented banking
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`transactions invalid under § 101). As a result, the identity verification system claimed in the
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`’539 patent is drawn to an unpatentable abstract idea.
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`ALICE STEP TWO. The limitations of the exemplary claim 22 do nothing more than
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`implement the abstract idea discussed above in a general-purpose computer system, and the
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`claim therefore also fails at Alice step 2. In other words, the ’539 patent does not claim any
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`improvements to computer systems, such as faster processing, a new type of database, or a
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`special form of encryption. Rather, it claims only an arrangement of various prior art general
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`purpose computer components that perform identity verification using known methods. See
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`Synopsys, 839 F.3d at 1150–51 (finding claims for creating hardware schematics abstract in part
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`because they were not “directed to a specific improvement to the way computers operate”).
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`As an initial matter, the patent itself states that the claimed “time-varying multicharacter
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`code” is not inventive, but rather is generated by a prior art device such as a smart card. (’539
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`patent at 7:30-39, 8:17-35.) Accordingly, the time-varying code itself cannot supply an inventive
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`concept at Alice step 2. Likewise, none of the individual claim elements that implement use of
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`that time-varying code to control access to the account holder’s account is a technological
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`innovation. In fact, the specification emphasizes their conventional nature. For example, it
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`states that the computer system “may be a general-purpose computer system” and is “not limited
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`to a particular computer platform, particular processor, or … high level programming language.”
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`(’539 patent at 6:51-53; see also id. at 5:63-65, 6:4-17.) The database with which it interacts can
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`be “any kind of database,” and it can run on any operating system employing a general purpose
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`“wide area network … such as the internet.” (Id. at 6:18-20, 7:12-22.) Moreover, the database
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`can be used in multiple contexts, including financial, medical and others. (Id. at 3:44-63.)4
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`These general-purpose elements are neither inventive nor do they add “significantly more” than
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`the abstract idea of verification, as Alice requires. Alice, 134 S. Ct. at 2355; see also buySAFE,
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`765 F.3d at 1355 (“The claims’ invocation of computers adds no inventive concept.”); Erie, 850
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`F.3d at 1329 (“recit[ation of] routine computer functions, such as the sending and receiving
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`information to execute the database search” insufficient under Alice step 2).
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`The specification also makes clear that the functions recited by claim 22 are
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`conventional. The first claim limitation – “receiving a transaction request,” – merely involves the
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`receipt of data by a computer system. (E.g., ’539 patent at 12:24-26); see buySAFE, 765 F.3d at
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`1355 (“That a computer receives and sends the information over a network—with no further
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`specification—is not even arguably inventive.”). The second and third limitations – “mapping” a
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`code to a user’s identity and “determining compliance with any access restrictions” – involve
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`simple associations and comparisons between various pieces of stored data. (’539 patent at
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`Abstract, 12:1-4); see Blue Spike, 2015 WL 5260506, at *5–6 (claims “generally directed to the
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`4 These passages or substantially similar language are found in each asserted patent. See supra at
`section III.
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`abstract concept of comparing one thing to another” using a computer are patent-ineligible). The
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`fourth and fifth limitations – “accessing” and “providing” information from the database – are
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`simple data operations that can be performed by any computer containing a database. (’539
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`patent at 12:27-31); see Accenture, 728 F.3d at 1338 (claim covering a database and functions
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`performed by said database did not claim patentable subject matter). The final limitation,
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`“enabling or denying” a transaction, is only the final authorization (or not) of the transaction.
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`(’539 patent at 10:49-57, 12:43-46.) Moreover, the sequence of these method steps is entirely
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`conventional; nothing about their c