Check-Processing Invention Found Patent-Eligible
On November 27, 2017, the United States District Court for the District of Minnesota ordered summary judgment of patent eligibility in Soultran, Inc. v. U.S. Bancorp, No. 13-cv-2637. The claimed invention was directed to a method of check processing comprising (i) receiving check data from a point-of-sale terminal, (ii) crediting the merchant’s account, (iii) receiving the physical check and scanning it, and (iv) comparing the resulting image to the check data. The Court ruled this invention to be patent-eligible pursuant to 35 U.S.C. § 101, as a matter of law.
The Court had previously stayed the case while the accused infringer sought a covered-business-method (CBM) review at the United States Patent and Trademark Office. The Office’s Patent Trial and Appeal Board (PTAB) rejected the portion of the request based on § 101, but instituted review on the question of whether the challenged claims were invalid because the check-processing invention was obvious. The PTAB ultimately ruled that the invention was not obvious, and the District Court lifted the stay and issued a claim-construction ruling.
The parties then filed cross-motions for summary judgment, which resulted in the November 27 order. In the order, the Court first considered infringement issues and, based on its previous claim construction, granted plaintiff’s motion for summary judgment of infringement. The court then took up the issue of patentable subject matter under § 101.
Alleged inventions that appear similar to the one at issue in this case, a four-step method which includes a step of “receiving check data,” a step of “crediting an account,” and a step of “comparing [data and an image] by a computer,” have frequently been found to be unpatentable, abstract ideas. Generic data-processing steps and conventional use of scanners and other digital equipment have not tended to support patentability. However, in this case the Court determined that including the third step, “receiving said paper checks and scanning said checks,” presented a different kind of invention.
The Court’s claim construction specified that the “receiving” of the check must take place at a different location from the point-of-sale terminal. In its § 101 order, the Court determined that because the claim required physical movement of the check, “the character of the claim as a whole” was not directed to an abstract idea such as “delaying and outsourcing the scanning of paper checks.” To make this determination, the Court explicitly considered the invention’s alleged advance over the prior art (separating the initial processing of the check data from the scanning of the check) as set forth in the patent’s abstract. The Court also considered as persuasive—but not preclusive—the PTAB’s decision denying review on § 101 grounds. The Court was persuaded that “the character of Claim 1 is directed to a physical process for processing paper checks,” and that because the claim was directed to a physical process, the claim was not directed to an abstract idea.
Defendant now faces a case where infringement, obviousness (at least on certain grounds), and subject-matter patentability have all been decided against it before trial. The Court’s order sets the remaining issues for trial on March 6, 2018. If there is no settlement, then the § 101 issue should reach the Court of Appeals for the Federal Circuit sometime late next year. At least until then, both patent owners and accused infringers should be wary of information-processing claims that include a physical (or physical-sounding) step. The case also illustrates the danger to accused infringers when post-grant-review proceedings, which are often an efficient way to litigate patent validity, do not have the intended result.