Here is another §101 opinion by Judge Pfaelzer, from the case of Enfish v. Microsoft: [Enfish].
Judge Pfaelzer’s §101 opinion in Enfish v. Microsoft
January 24th, 2015Judge Pfaelzer’s Opinion in Cal. Tech. v. Hughes
January 23rd, 2015If you are feeling beaten down by all the §101 cases finding inventions patent-ineligible, you might find Judge Pfaelzer’s opinion in Cal. Inst. of Tech. v. Hughes Communs., Inc. refreshing.
I couldn’t find a copy of the opinion on the internet; so, you can view it [here].
More Gifts for the Discerning Patent Professional
January 20th, 2015With Valentine’s Day approaching you may be wondering what to get that special patent professional in your life. Here are a few options:
1) An oldie, but a goodie: The IP Man movie poster.
2) The Mayo v. Prometheus T-Shirt
Was your Valentine an amicus in Mayo v. Prometheus? Celebrate the Supreme Court and the clarity that it has brought to 35 U.S.C. §101.
3) Special Effects Nose Wax
A patent attorney can always use more nose wax despite what the Supreme Court said in White v. Dunbar, 119 U.S. 47 (1886):
Some persons seem to suppose that a claim in a patent is like a nose of wax, which may be turned and twisted in any direction, by merely referring to the specification, so as to make it include something more than, or something different from, what its words express. The context may undoubtedly be resorted to, and often is resorted to, for the purpose of better understanding the meaning of the claim, but not for the purpose of changing it and making it different from what it is. The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is, and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms.”
Superfluous
January 12th, 2015Interesting quote from Octane Fitness v. Icon Health & Fitness, 134 S. Ct. 1749, 1758 (2014):
We reject Brooks Furniture for another reason: It is so demanding that it would appear to render § 285 largely superfluous. We have long recognized a common-law exception to the general “American rule” against fee-shifting — an exception, “inherent” in the “power [of] the courts” that applies for “`willful disobedience of a court order’” or “when the losing party has `acted in bad faith, vexatiously, wantonly, or for oppressive reasons….’” Alyeska Pipeline Service Co. v. Wilderness Society,421 U.S. 240, 258-259, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). We have twice declined to construe fee-shifting provisions narrowly on the basis that doing so would render them superfluous, given the background exception to the American rule, seeChristiansburg Garment Co. v. EEOC, 434 U.S. 412, 419, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978); Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, n. 4, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968) (per curiam), and we again decline to do so here.
Something to keep in mind the next time you are considering whether Alice v. CLS Bank renders 35 U.S.C. §103 largely superfluous for certain types of inventions.
Perhaps Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988) is more on point:
As our cases have noted in the past, we are hesitant to adopt an interpretation of a congressional enactment which renders superfluous another portion of that same law.
Id. (citing Massachusetts Mutual Life Ins. Co. v. Russell, 473 U. S. 134, 142 (1985); FEC v.National Conservative Political Action Committee, 470 U. S. 480, 486 (1985); Park ‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U. S. 189, 197 (1985); United States v. Generix Drug Corp., 460 U. S. 453, 458-459 (1983); Dickerson v. New Banner Institute, 460 U. S. 103, 118 (1983)).
- UPDATED January 24, 2015:
Perhaps better still is this statement from Bilski v. Kappos, 130 S.Ct. 3218, 3228-29 (2010):
A conclusion that business methods are not patentable in any circumstances would render § 273 meaningless. This would violate the canon against interpreting any statutory provision in a manner that would render another provision superfluous. See Corley v. United States, 556 U.S. ___, ___, 129 S.Ct. 1558, 1566, 173 L.Ed.2d 443 (2009). This principle, of course, applies to interpreting any two provisions in the U.S.Code, even when Congress enacted the provisions at different times. See, e.g., Hague v. Committee for Industrial Organization, 307 U.S. 496, 529-530, 59 S.Ct. 954, 83 L.Ed. 1423 (1939) (opinion of Stone, J.). This established rule of statutory interpretation cannot be overcome by judicial speculation as to the subjective intent of various legislators in enacting the subsequent provision. Finally, while § 273 appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions.
There is no “I” in Federal Cyrcut
December 30th, 2014It is not uncommon during oral arguments to hear advocates refer to a particular appellate judge’s holding in a previous case. Advocates are particularly fond of doing this during oral argument when they refer to an opinion that Judge Rich or a present panel member authored for the court. During an oral argument at the Federal Circuit, Judge Moore pointed out to an advocate that holdings are by the court — not a particular judge. The author of an opinion is merely listed as author on behalf of the majority of the panel. In fact, Judge Moore used the words “pandering” and “insulting” in her pointed remarks to the advocate. You can listen to those remarks here: [Listen].
(I’ve taken out all reference to the particular attorney. Frankly, advocates make such references quite often; so, the advocate who was chastised is not alone.)
Patently Inconsistent
December 25th, 2014I was listening to the oral argument recording of B&B Hardware v. Hargis and was struck by the opening lines of the argument:
The Lanham Act contains only one concept of likelihood of confusion. That is why two tribunals in this case decided the same issue, and that is why issue preclusion is appropriate. Whether a court is considering registration or infringement or both at the same time, the statutory test is the same, whether the resemblance of the marks as used on particular goods would give rise to a likelihood of confusion or mistake or deceit.
It is uncanny how germane that analysis is to the argument over the proper test for patent eligibility. Namely, the Supreme Court has distorted the test for patent eligibility under 35 U.S.C. §101 into such a cockeyed farce that the meaning of invention under §101 is totally out of alignment with other sections of the Patent Act. Under §§102, 103, 271, etc. an invention is assessed by looking at all claim limitations. However, when it comes to §101, the Court has deviated by disregarding claim limitations as mere pre-solution or post-solution activity. Moreover, the Court has effectively regressed to a “gist of the invention” analysis that it previously repudiated in Aro I and Diehr.
To modify the argument above and apply it to patent eligibility, one might say:
The 1952 Patent Act contains only one concept of invention. Whether a court is considering patent eligibility or infringement or both at the same time, the statutory test is the same, whether all claim limitations are satisfied.
Recent Trademark Oral Arguments at the Supreme Court
December 23rd, 2014I was on vacation during the first week of December and completely overlooked the fact that the Supreme Court heard oral argument in two trademark cases during that time.
In Hana Financial, Inc. v. Hana Bank, the Court is addressing the issue of whether the jury or the court determines whether use of an older trademark may be tacked to a newer one. You can listen to the oral argument here: [Listen].
In B&B Hardware, Inc. v. Hargis Industries, Inc., the Court entertained the issues of (1) whether the Trademark Trial and Appeal Board’s finding of a likelihood of confusion precludes respondent from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and (2) whether, if issue preclusion does not apply, the district court was obliged to defer to the Board’s finding of a likelihood of confusion absent strong evidence to rebut it. You can listen to that oral argument here: [Listen].
9th Circuit Oral Arguments YouTube Page
December 12th, 2014The U.S. Court of Appeals for the 9th Circuit appears to have increased the number of oral arguments that it records on video. Many of those are available at this YouTube link: https://www.youtube.com/user/9thcirc/videos.
If you are coaching students in any upcoming moot court competitions, you might want to make them aware of these videos as a resource.
While I usually only have time to listen to oral argument recordings driving to and from work, I look forward to the day when the Federal Circuit follows the lead of the 9th Circuit and records the video of Federal Circuit oral arguments. Some would be quite interesting to watch.
Abracadabra . . . Abstract Idea
November 21st, 2014As I read Judge Lourie’s opinion for the court in Ultramercial et al. v. Hulu et al., 2010-1544 (Fed. Cir. Nov. 13, 2014), I was reminded of these previous comments by Judge Lourie with respect to judicial notice:
We have an examination system based on citation of references. I may have used the word ’slippery slope’ already. But, I worry about that — where an examiner who is of some skill and training in a particular art could simply say ‘Aha, I think, I think, and it is my common knowledge . . . .’ And, they start rejecting claims based on what they ‘think.’ Isn’t that a serious departure from our system of citation of references to reject claims? [Listen]
It doesn’t seem to me to be the function of the appellate court to take judicial notice of the ordinariness of certain decided claim limitations. We can take judicial notice that ‘today is Wednesday’ and ‘we had snow earlier in the week’ — I’m glad you made it through the snow — but, we don’t make rejections based on judicial notice of . . . finding a claim limitation to be common sense. [Listen] See Oral Argument for HIMPP v. HEAR-WEAR TECHNOLOGIES, LLC, No. 2013-1549 (Fed. Cir. May 27, 2014).
The reason those comments stand out in my mind are that in Ultramercial Judge Lourie makes the following comment for the court without citing to any evidence:
This ordered combination of steps recites an abstraction—an idea, having no particular concrete or tangible form. The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an abstract idea, devoid of a concrete or tangible application. Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content.
It strikes me that such a statement is the taking of judicial notice.
It is also interesting to note that the court identifies three different abstract ideas when assessing the claim. First, the court writes:
The district court found that the abstract idea at the heart of the ’545 patent was “that one can use [an] advertisement as an exchange or currency.” Ultramercial, 2010 WL 3360098, at *6. We agree.
See Ultramercial, slip opinion at page 9.
Later on, the court writes:
“the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content.”
See Ultramercial, slip opinion at page 10.
And finally, the court states that:
“The majority of those steps comprise the abstract concept of offering media content in exchange for viewing an advertisement.”
See Ultramercial, slip opinion at page 11.
So, the Federal Circuit has identified three different abstract ideas with respect to the claim: (1) “that one can use [an] advertisement as an exchange or currency;” (2) ”showing an advertisement before delivering free content;” and (3) “offering media content in exchange for viewing an advertisement.”
In my heart of hearts (no pun intended) I like to think that the panel in Ultramercial — well, at least Judges Lourie and O’Malley — are discreetly serving up some softball issues for appeal to the Supreme Court:
1) Can a court’s patent eligibility analysis be correct if it recites three different “abstract” ideas when assessing a claim;
2) In a matter concerning a taking of property rights, can an appellate court take judicial notice of an abstract idea without citation of evidence;
3) By choosing to refer to the “abstract” idea as the “heart of the ‘545″ patent, can the Supreme Court rationalize this analysis with its decision in Aro I.
4) By discounting several claim limitations, can the Supreme Court rationalize its §101 analysis with 35 U.S.C. §271. For example, how irrational would it sound if a court wrote the following when assessing patent infringement under 35 U.S.C. §271:
The accused infringer has infringed the heart of the claim. The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe the heart of the claim when the remaining claim limitations are not assessed. Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations, i.e., at least half, describes the heart of the claim of showing an advertisement before delivering free content. We therefore find that the accused infringer performed the majority of the claim limitations, infringed the heart of the claim, and thus infringed claim 1. The claim limitations that were not performed by the accused infringer are mere extra-solution activity.
Transformation of data surviving §101 challenges in some circumstances
November 6th, 2014In two recent instances, a transformation of data has been recognized as potentially sufficient to satisfy the patent eligibility test under 35 U.S.C. §101.
In the Board’s decision in PNC Bank v. Secure Axcess, CBM2014-0100 (PTAB Sept. 9, 2014) (available [here]), the Board noted that the particular transformation of data under consideration was (1) not an abstract idea and (2) satisfied the “machine or transformation test”:
Petitioner challenges claims 1-32 of the ‘191 patent as directed to patent-ineligible subject matter under 35 U.S.C. § 101. Pet. 72-77. Patent eligible subject matter is defined in 35 U.S.C. § 101:
Whoever 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.
There are, however, three limited, judicially-created exceptions to the broad categories of patent-eligible subject matter in §.101: laws of nature; natural phenomena; and abstract ideas. Mayo Collaborative Servs. v.Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012). The Supreme Court has made clear that the test for patent eligibility under § 101 is not amenable to bright-line categorical rules. See Bilski v. Kappos, 130 S. Ct. 3218, 3222 (2010).
1. Whether the Claims Are Directed to an Abstract Idea
Petitioner challenges each claim of the ‘191 patent as failing to recite patentable subject matter under § 101, because the claims fall within the judicially created exception encompassing abstract ideas. Pet. 73-76. In Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Supreme Court reiterated the framework set forth previously in Mayo, “for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of these concepts.” Alice, 134 S. Ct. at 2355. The first step in the analysis is to “determine whether the claims at issue are directed to one of those patent ineligible concepts.” Id. If they are directed to a patent-ineligible concept, the second step in the analysis is to consider the elements of the claims “individually and ‘as an ordered combination’” to determine whether there are additional elements that ‘”transform the nature of the claim’ into a patent-eligible application.” Id. (quoting Mayo, 132 S. Ct. at 1291, 1297). In other words, the second step is to “search for an ‘inventive concept’- 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 on the [ineligible concept] itself.”‘ Id. (alteration in original) (quoting Mayo, 132 S. Ct. at 1294).
Turning to the Petition, Petitioner, relying on the framework set forth in Mayo and followed in Alice, asserts that claims 1-32 are unpatentable under § 101, because the claims are drawn to patent-ineligible “abstract ideas, with only insignificant, well-known subject matter added.” Pet. 73; see also Pet. 73-76. Patent Owner disagrees. Prelim. Resp. 56-65.
In determining whether a method or process claim recites an abstract idea, we must examine the claim as a whole. Alice, 134 S. Ct. at 2355 n. 3. Claim 1, as a whole, relates to a computer-implemented method to transform data in a particular manner-by inserting an authenticity key to create formatted data, enabling a particular type of computer file to be located and from which an authenticity stamp is retrieved. On its face, there is nothing immediately apparent about these physical steps that would indicate the claim is directed to an abstract idea.
Moreover, claim 1, as a whole, is distinguishable from the patent ineligible abstract concepts found in Alice or Bilski. Alice involved “a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk.” Alice, 134 S. Ct. at 2356. Bilski involved the concept of hedging risk, which the Court deemed “a method of organizing human activity.” Bilski, 130 S. Ct. at 3222. Like the concept of hedging risk in Bilski, Alice’s “concept of intermediated settlement” was held to be “‘a fundamental economic practice long prevalent in our system of commerce.”‘ Alice, 134 S. Ct. at 2356. Similarly, the Court in Alice found that “[t]he use of a third-party intermediary . . . is also a building block of the modem economy.” Id. “Thus,” the Court held, “intermediated settlement . . . is an ‘abstract idea’ beyond the scope of § 101.” Id.
Petitioner asserts that claim 1 is an abstract idea, because it is nothing more than computerizing a purported centuries old practice of placing a trusted stamp or seal on a document to indicate the authenticity of the document. Pet. 74. Petitioner’s position is unpersuasive, because as indicated by Patent Owner (Prelim. Resp. 64-65), Petitioner does not tie adequately the claim language to the purported abstract concept of placing a trusted stamp or seal on a document. Although the claim recites retrieving an authenticity stamp, the claim does not recite placing the stamp, much less. doing so on a paper document, presumably as “centuries-old” practices have done. Similarly, the claim does not recite a paper document. Moreover, claim 2, which depends from claim 1, additionally recites that the formatted data is a web page, not a paper document.
We also find that Petitioner does not provide sufficient persuasive evidentiary support that the placing of a trusted stamp or seal on a document is “a fundamental economic practice” or a “building block of the modern economy.” See Alice, 134 S. Ct. at 2356 (citing various references concerning the concept of intermediated settlement, including an 1896 reference).
Petitioner further asserts claim 1 is patent-ineligible abstract idea, because it “relates to nothing more than manipulating and collecting data.” Pet 73 (citing CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011); In re Grams, 888 F.2d 835, 840 (Fed. Cir. 1989)). Patent Owner disagrees, indicating that claim 1 recites (1) transforming at an authentication host computer, received data (a) by inserting an authenticity key (b) _to create formatted data; and (2) returning, from the authentication host computer, the formatted data (a) to enable the authenticity key to be retrieved fro the formatted data and (b) to locate a preferences file. Prelim. · Resp. 58-59.
Petitioner’s reliance on CyberSource and Grams is unpersuasive. In CyberSource, the Federal Circuit indicated that mere collection and organization of data does not satisfy the transformation prong in the machine-or-transformation test See CyberSource, 654 F.3d at 1370. The Federal Circuit also indicated that the mere manipulation or reorganization of data also did not satisfy the transformation prong. See id. at 1375. The Federal Circuit concluded, however, that the claims at issue were to a patent ineligible abstract idea, not merely because of the collection, organization, and manipulation of data, but because all the claimed steps could be performed in the human mind, which is not the case here. See id. at 1373, 1376-77. Rather, the challenged claims specifically recite “transforming . . . received data by inserting an authenticity key to create formatted data,” thereby authenticating a web page with an authenticity stamp. Thus, the claims require a fundamental change to the data; a change that cannot be performed in the human mind.
Although the Federal Circuit in Grams held that data gathering steps cannot make an otherwise nonstatutory claim statutory, the court did not indicate that a claim with only data gathering steps and a mathematical algorithm necessarily always would be nonstatutory. Grams, 888 F.3d at 840 (quoting In re Meyer, 688 F.2d 789, 794 (CCPA 1982)).
Claim 1 of the ‘191 patent recites “transforming . . . at an authentication host computer” and “returning . . . from the authentication host computer,” which are not immediately apparent as being limited to data gathering. As such, on this record, claim 1 can be distinguished from claims in Grams, which rely on data gathering as the recited physical steps. Petitioner does not provide further arguments specifically addressing limitations in claims 2-32 (see generally Pet. 73-76).
For these reasons, we are not persuaded by Petitioner’s assertion that claims 1-32 are patent-ineligible abstract ideas. As such, we need not tum to the second step in the Mayo framework to look for additional elements that can transform the nature of the claim into a patent-eligible application of an abstract idea.
2. Whether the Claims Satisfy the Machine-or-Transformation Test
Petitioner also contends that claims 1-32 are unpatentable under § 101, because the claims are not tied to any particular machine and transform no article into a different state or thing, and thus do not satisfy the machine-or-transformation test. We understand that the machine-or transformation test is a useful tool, but is not sole test for whether an invention is a patent-eligible process under § 101. See Bilski 130 S. Ct. at 3227.
Petitioner asserts claim 1 does not transform an article into a different state or thing. Pet 76. Rather, according to Petitioner, the transforming limitation in claim 1 is merely manipulation or reorganization of data, which is not patent eligible. Pet. 76-77 (citing CyberSource, 654 F.3d 1375).
We are not persuaded that “transforming . . . received data by inserting an authenticity key to create formatted data” fails to satisfy the transformation prong. The claim language recites “transforming” one thing (”received data”) “to create” something else (”formatted data”) and further recites a particular manner of transforming (”by inserting an authenticity key”).
Petitioner does not provide persuasive argument or supporting evidence to support its position that the transforming limitation is merely manipulation or reorganization of data. Because Petitioner has not persuaded us that claim 1 does not meet the transformation prong of the machine-or-transformation test, we need not consider Petitioner’s other assertions that claim 1 does not meet the machine prong of the test. Furthermore, Petitioner does not provide further arguments regarding claims 2-32 (see generally Pet. 76-77), thus, we are not persuaded claims 1- 32 fail to satisfy the machine-or-transformation test.
Therefore, having considered the information provided in the Petition, as well as Patent Owner’s Preliminary Response, we are not persuaded Petitioner has demonstrated that it is more likely than not that the claims challenged in the Petition are unpatentable under 35 U.S.C. § 101.
(emphasis added).
In addition to noting that transformation of data can satisfy the test for patent eligibility in some circumstances, this decision is also important for noting that the determination of an abstract idea is sometimes grounded in underlying factual determinations — that is the determination of an abstract idea sometimes requires factual evidence. See also Arrhythmia Research Technology v. Corazonix Corp., 958 F. 2d 1053 (Fed. Cir. 1992)(”Whether a claim is directed to statutory subject matter is a question of law. Although determination of this question may require findings of underlying facts specific to the particular subject matter and its mode of claiming“).
Providing factual evidence of what is an abstract idea implicates In re Zurko and the associated procedural requirements for evidencing a factual finding:
Finally, the deficiencies of the cited references cannot be remedied by the Board’s general conclusions about what is “basic knowledge” or “common sense” to one of ordinary skill in the art. As described above, the Board contended that even if the cited UNIX and FILER2 references did not disclose a trusted path, “it is basic knowledge that communication in trusted environments is performed over trusted paths” and, moreover, verifying the trusted command in UNIX over a trusted path is “nothing more than good common sense.” Ex parte Zurko, slip op. at 8. We cannot accept these findings by the Board. This assessment of basic knowledge and common sense was not based on any evidence in the record and, therefore, lacks substantial evidence support. As an administrative tribunal, the Board clearly has expertise in the subject 1386*1386 matter over which it exercises jurisdiction. This expertise may provide sufficient support for conclusions as to peripheral issues. With respect to core factual findings in a determination of patentability, however, the Board cannot simply reach conclusions based on its own understanding or experience — or on its assessment of what would be basic knowledge or common sense. Rather, the Board must point to some concrete evidence in the record in support of these findings.
See In re Zurko, 258 F.3d 1379, 1385-86 (Fed. Cir. 2001).
Thus, PNC Bank v. Secure Axcess reminds us of several important points:
(1) the assessment of 35 U.S.C. §101 is a question of law grounded in underlying factual findings;
(2) the assessment of whether something is an abstract idea can be based on factual findings — failure to provide sufficient evidence of facts with respect to an abstract idea can cause an abstract idea challenge to fail;
(3) with respect to core factual findings in a determination of patentability . . . the Board must point to some concrete evidence in the record in support of [its] findings.
The second recent decision of note is from Card Verification v. Citigroup, Docket No. 13 C 6339 (N.D. Ill. Sept. 29, 2014), where a district court stated in response to a 12(b)(6) motion:
But the claims may be sufficiently limited by the plausible transformation that occurs when the randomly-generated tag is added to the piece of confidential information. Typically, transforming data from one form to another does not qualify as the kind of transformation regarded as an important indicator of patent eligibility. See CyberSource, 654 F.3d at 1375 (“[T]he mere manipulation or reorganization of data … does not satisfy the transformation prong.”). But here, the claimed invention goes beyond manipulating, reorganizing, or collecting data by actually adding a new subset of numbers or characters to the data, thereby fundamentally altering the original confidential information. Contra id. at 1372 (process of constructing “map” of credit card numbers was no different than writing down a list of numbers and compiling information).
The use of a credit card number provides an illustrative example. Once the computer in the process splits up the credit card number into two separate pieces, randomly generated tags are added to the two pieces. The addition of the tag transforms what was once a credit card number into an identifier for use by the verifying party. The verifying party then matches up the two pieces of the information solely because the randomly-generated tag is affixed to both. At least one of the objects of the ‘245 Patent process is to transform data from one form into another “that will be recognized by the intended recipient but secure against decryption by unintended recipients.” See, e.g., TQP Dev., LLC v. Intuit, Inc., No. 2:12 CV 180 WCB, 2014 WL 651935, at *5 (E.D. Tex. Feb. 19, 2014). The claim requiring the addition of the tags plausibly does just that. The patent not only recites a process for verifying transaction information, it also involves a protocol for making the communication system itself more secure. (‘245 Patent, 2:14-20). Therefore, even though the method does not result in the physical transformation of matter, see Diehr, 450 U.S. 175, it utilizes a system for modifying data that may have a concrete effect in the field of electronic communications. Accordingly, when viewing the patent in the light most favorable to Card Verification, it plausibly recites a patent-eligible application of the abstract idea of verifying a transaction. Citigroup’s Motion to Dismiss is therefore denied without prejudice. Citigroup is free to challenge the validity of the ‘245 Patent after discovery and claim construction are completed in this case.
Notably, in both of these decisions, the transformation of data occurred by adding an additional piece of data to an original piece of data so as to create a new piece of data.