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The Cybersource case and the Ultramercial case – Continuing confusion in the Federal Circuit?

By Adarsh Ramanujan & Umang Srivastava

The US Supreme Court decision in the Bilski case is often considered as both path-breaking as well as incomplete – path-breaking in that it ruled against the exclusivity of the Machine or Transformation test (hereinafter MOT) in applying 35 USC 101 and incomplete in that it failed to provide any consolidated test. Some consider that this decision has only added more confusion to the existing scenario and one of the recently cited instance to highlight this confusion are two decisions of the Federal Circuit, namely, Ultramercial v. Hulu and Cybersource Corporation v. Retail Decisions Inc. This short article will examine whether these two decisions have led to an incorrigible departure from each other or merely represent an apparent aberration that could, in reality, be harmonized by some logic.
Cybersource Corporation v. Retail Decision Inc.
In the case of Cybersource case the claims in question (viz. claim 3 and claim 2) related to a method and a computer readable medium containing a program that executed such method, respectively. The invention was essentially a credit card fraud detection system which made use of ‘Internet Address Information’ (IP address, MAC address, E-mail etc.) to secure online transactions relating to purchase of downloadable content.

In relation to the method claim (Claim 3) the court observed that the claimed method anyway did not satisfy the MOT test. The mere collection and organization of data regarding credit card numbers and internet addresses was held to be insufficient to satisfy the transformation prong of the test. The court observed that the plain language of claim 3 did not require the method to be executed on a particular machine or any machine at all. Although ‘internet’ was mentioned in the claim, the Court noted that the ‘internet’ did not form part of the execution of the fraud detection method; it merely served as a source for providing data and data gathering steps cannot make an otherwise non-statutory claim statutory.

The Court went on to hold that the claimed method was drawn towards a mental process - a sub-category of “abstract ideas”. The court analysed all of the steps involved in claim 3 and observed that the claim scope was not limited to any specific algorithm and deduced that they can be performed mentally by the human mind or by merely using a pen and paper.
In relation to claim 2, though the claim specifically recited a computer readable medium, the Court treated it as a process claim only. The Court observed that in determining patent eligibility under 35 USC 101, one has to “look at the underlying invention”. The Court referred to the case of In re Abele, wherein an apparatus claim was treated as a method claim since the claim was not drawn to a “specific apparatus distinct from other apparatus[es] that can perform identical functions.” Obviously, the claim in Cybersource was not a means-plus-function claim and was instead, directed to a specific apparatus – a computer readable medium. Yet, the Court was of the opinion that CyberSource had failed to demonstrate that claim 2 was truly drawn to a specific computer readable medium and not to the underlying method of credit card fraud detection. The Court specifically rejected the application of the principle laid down in In re Alappat in the facts of the case.

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[Adarsh Ramanujan is Associate and Umang Srivastava is an intern in IPR Division, Lakshmikumaran & Sridharan, New Delhi]  
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