In re Bilski strikes!

In re Bilski has claimed its first victim (to my knowledge) in district court.  In Cybersource Corporation v. Retail Decisions, Inc. No. C 04-03268 MHP (N.D. Cal. March 26, 2009), Plaintiff’s patent was declared invalid as not drawn to patent-eligible subject matter under 35 U.S.C. §101.  The patent-in-suit was for a “method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the internet.”

Using the rationale of the In re Bilski decision (545 F.3d 943 (Fed. Cir. Oct. 30, 2008)(en banc)) the court found, among other things, that:

  • The “manipulation” of a credit card number (or other type of account number) does not meet the “transformation” requirement re-asserted in Bilski.
  • An IP address is not a “visual depiction” of a computer in the sense required by Bilski and thus its “manipulation” also does not meet the “transformation” requirement.
  • The recitation of “over the Internet” and “one or more processors” in a claim does not amount to limiting a claim to a “specific machine” as required by Bilski

Perhaps of most interest to patent litigators, the Court also held that “[T]here is at present no legal doctrine creating a special ‘Beauregard claim’ that would exempt [claims] from the analysis of Bilski.”  A “Beauregard claim” is a claim drawn to “computer readable media” containing software, rather than the method steps implemented by the software itself.  There has been much discussion as to whether a Beauregard claim, which would be considered an article of manufacture rather than a pure method claim, falls outside of the purview of Bilski.  That question, it appears, has been answered with a resounding “no”, at least in the Northern District of California.

The opinion in this case comes from judge Marilyn H. Patel who is no lightweight (you may remember her as the judge in the RIAA v. Napster case) so this opinion will likely be persuasive outside of the 9th Circuit.  Judge Patel expressed what many of us have wondered about the future of business method patents in the following quote:

In analyzing Bilski, one is led to ponder whether the end has arrived for business method patents, whose numbers swelled following the decision in State Street Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998). Without expressly overruling State Street, the Bilski majority struck down its underpinnings. This caused one dissenter, Judge Newman, to write that State Street “is left hanging,” while another dissenter, Judge Meyer, registered “an emphatic ‘yes’” to rejecting State Street, and a third, Judge Rader, queried whether the court was willing to decide that the entire field of business patents is “undeserving of incentives for invention.” 545 F.3d at 995, 998, 1014. Although the majority declined say so explicitly, Bilski’s holding suggests a perilous future for most business method patents.