Monday, August 22, 2011

Cybersource Corporation v Retail Decisions – a beautiful mind

In CyberSource Corp. v. Retail Decisions, Inc. (Case No. 2009-1358) we see the United States Court of Appeals for the Federal Circuit construct a can-you-do-it-in-your-mind test to sit alongside the existing machine-or-transformation test.  We also see the Beauregard claim hit the canvas.

The Cybersource patent

Cybersource is the owner of US Patent No. 6,029,154 (‘154 patent) for a “method and system for detecting fraud in a credit card transaction between [a] consumer and a merchant over the Internet”.

The ‘154 patent identifies a problem for online sales of downloadable content.  Address and identity information are not enough to adequately verify that the customer who is purchasing the goods is actually the owner of the credit card.

The solution is to use “Internet address” information to determine whether an Internet address relating to a particular transaction is consistent with other Internet addresses that have been used in transactions using the same credit card.


The Court found that process claim 3 failed to meet either prong of the machine-or-transformation test.  The method simply required one to “obtain and compare intangible data pertinent to business risks”.

The mere collection and organisation of data regarding credit card numbers and Internet addresses was insufficient to meet the transformation prong of the test.  The plain language of claim 3 does not require the method to be performed by a particular machine, or even a machine at all.

Mental process

The Court went on to hold that claim 3 failed to recite patent-eligible subject matter because it was drawn to an unpatentable mental process – a subcategory of unpatentable abstract ideas.

In Bilski v. Kappos, 130 S. Ct. 3218 (2010) the Court held that mental processes are not patent-eligible subject matter because the application of only human intelligence to the solution of practical problems is no more than a claim to a fundamental principle.

All of the method steps of claim 3 could be performed in the human mind, or by a human using a pen and paper.  Cybersource admitted as much in its appeal brief.  Claim 3 did not limit its scope to any particular fraud detection algorithm, and no algorithms were disclosed in the ‘154 patent specification.

This is completely different from cases where the use of a computer is required to perform the claimed method.  Like calculating a position of a GPS receiver, or rendering a halftone image of a digital image.  Apparently.

Substance over form

Beauregard claim 2 was dismissed as reciting nothing more than a computer readable medium containing program instructions for executing the method of claim 3.  Claim 3 was found to be unpatentable being drawn to a mental process.

The Court acknowledged that, as a general matter, programming a general purpose computer to perform an algorithm creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.

But simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind didn’t get claim 2 over the line.

What now?

We have a new subject matter test in addition to the machine-or-transformation test.  This is the can-you-do-it-in-your-mind test.  I guess we will see some clarification as to who’s mind.  Some people can do really clever hard stuff in their heads.  Should the mind be an ordinary mind?  Or a beautiful mind?


  1. Hi Matt,

    In Europe, it seems they have answered to your last question : whether a beautiful mind or an ordinary mind, if you don't use any technical means, the claimed subject-matter is not patentable under Art.52(2) & (3) EPC : "it is doubtful as a matter of principle whether complexity can be used to disqualify an activity as a mental activity".
    see decision T914/02 (12.07.2005), point 2.3.4 - see
    Before the EPO, merely reciting the use of a computer to execute an algorithm in the claim is sufficient to satisfy art.52(2) ... but not inventive step (art.56).

    I've been told it's been pretty cold in Wellington...

    Laurent L.

  2. an extremely beautiful mind


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