United States Court of Appeals
for the Federal Circuit
__________________________
CYBERSOURCE CORPORATION,
Plaintiff-Appellant,
v.
RETAIL DECISIONS, INC.,
Defendant-Appellee.
__________________________
2009-1358
__________________________
Appeal from the United States District Court for the
Northern District of California in case no. 04-CV-03268,
Judge Marilyn H. Patel.
___________________________
Decided: August 16, 2011
___________________________
J. MICHAEL JAKES, Finnegan, Henderson, Farabow,
Garrett & Dunner, LLP, of Washington, DC, argued for
plaintiff-appellant. With him on the brief were ERIKA H.
ARNER and JUSTIN R. LOWERY. Of counsel on the brief
was MARC J. PERNICK, Morrison & Forester, LLP, of Palo
Alto, California.
SCOTT J. BORNSTEIN, Greenberg Traurig, LLP, of New
York, New York argued for defendant-appellee. With him
on the brief was ALLAN A. KASSENOFF. Of counsel was
JAMES W. SOONG, of E. Palo Alto, California.
CYBERSOURCE v. RETAIL DECISIONS 2
__________________________
Before BRYSON, DYK, and PROST, Circuit Judges.
DYK, Circuit Judge.
Plaintiff-appellant CyberSource Corporation (“Cyber-
Source”) appeals from a decision of the United States
District Court for the Northern District of California. The
district court granted summary judgment of invalidity of
claims 2 and 3 of U.S. Patent No. 6,029,154 (“’154 patent”)
under 35 U.S.C. § 101 for failure to recite patent-eligible
subject matter. See CyberSource Corp. v. Retail Decisions,
Inc., 620 F. Supp. 2d 1068 (N.D. Cal. 2009). We affirm.
BACKGROUND
CyberSource is the owner by assignment of the ’154
patent, which recites a “method and system for detecting
fraud in a credit card transaction between [a] consumer
and a merchant over the Internet.” ’154 patent, at [57].
The ’154 patent’s specification explains that prior art
credit card fraud detection systems—which generally rely
on billing addresses and personal identification informa-
tion—work well for “face-to-face” transactions and trans-
actions where “the merchant is actually shipping a
package . . . to the address of a customer.” Id. col.1 ll.21–
24. But for online sales where the product purchased is
downloadable content, the patent explains, “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.” Id. col.1 ll.28–30.
The ’154 patent purports to solve this problem by us-
ing “Internet address” information (IP addresses, MAC
addresses, e-mail addresses, etc.) to determine whether
an Internet address relating to a particular transaction
3 CYBERSOURCE v. RETAIL DECISIONS
“is consistent with other Internet addresses [that have
been] used in transactions utilizing [the same] credit
card.” Id. col.3 ll.15–16. As we discuss in detail below,
the claims of the ’154 patent are broad and essentially
purport to encompass any method or system for detecting
credit card fraud which utilizes information relating
credit card transactions to particular “Internet ad-
dress[es].” 1
1 Claim 3, as amended during reexamination, reads:
3. A method for verifying the validity of a credit
card transaction over the Internet comprising the
steps of:
a) obtaining information about other transac-
tions that have utilized an Internet address
that is identified with the [ ] credit card
transaction;
b) constructing a map of credit card numbers
based upon the other transactions and;
c) utilizing the map of credit card numbers to
determine if the credit card transaction is
valid.
J.A. 32 (’154 Patent Reexamination Certificate), col.2
ll.38–47.
Claim 2, as amended during reexamination, reads:
2. A computer readable medium containing pro-
gram instructions for detecting fraud in a credit
card transaction between a consumer and a mer-
chant over the Internet, wherein execution of the
program instructions by one or more processors of
a computer system causes the one or more proces-
sors to carry out the steps of:
a) obtaining credit card information relating to
the transactions from the consumer; and
b) verifying the credit card information based
upon values of plurality of parameters, in
CYBERSOURCE v. RETAIL DECISIONS 4
CyberSource brought suit against Retail Decisions,
Inc. (“Retail Decisions”) on August 11, 2004, alleging
infringement of the ’154 patent. Retail Decisions thereaf-
ter initiated an ex parte reexamination of the ’154 patent,
and the district court stayed its proceedings while the
U.S. Patent and Trademark Office (“PTO”) conducted the
examination. The district court resumed proceedings
after the PTO reissued the ’154 patent with amended
claims on August 5, 2008. On October 30, 2008, this court
combination with information that identi-
fies the consumer, and that may provide an
indication whether the credit card transac-
tion is fraudulent,
wherein each value among the plurality of pa-
rameters is weighted in the verifying step
according to an importance, as determined
by the merchant, of that value to the credit
card transaction, so as to provide the mer-
chant with a quantifiable indication of
whether the credit card transaction is
fraudulent,
wherein execution of the program instructions
by one or more processors of a computer
system causes that one or more processors
to carry out the further steps of;
[a] obtaining information about other
transactions that have utilized an
Internet address that is identified
with the credit card transaction;
[b] constructing a map of credit card
numbers based upon the other trans-
actions; and
[c] utilizing the map of credit card num-
bers to determine if the credit card
transaction is valid.
Id. col.2 ll.9–37.
5 CYBERSOURCE v. RETAIL DECISIONS
decided In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en
banc). Retail Decisions thereafter moved for summary
judgment of invalidity under 35 U.S.C. § 101. After
briefing and a hearing, the district court found that claim
3 recited “an unpatentable mental process for collecting
data and weighing values,” which did “not become pat-
entable by tossing in references to [I]nternet commerce.”
CyberSource, 620 F. Supp. 2d at 1077. The court further
found with respect to claim 2 that “simply appending ‘A
computer readable media including program instructions .
. .’ to an otherwise non-statutory process claim is insuffi-
cient to make it statutory.” Id. at 1080. The district court
thus granted summary judgment of invalidity. Id. at
1078.
CyberSource appealed to this court in April 2009. Af-
ter the Supreme Court granted certiorari in Bilski v.
Kappos, 129 S. Ct. 2735 (June 1, 2009), we granted Cy-
berSource’s motion to stay the proceedings. Briefing was
resumed on October 28, 2010, following the Supreme
Court’s decision. See Bilski v. Kappos, 130 S. Ct. 3218
(2010). We have jurisdiction pursuant to 28 U.S.C. §
1295(a)(1).
DISCUSSION
We review grants of summary judgment de novo. To-
kai Corp. v. Easton Enters., Inc., 632 F.3d 1358, 1366
(Fed. Cir. 2011). Issues of patent-eligible subject matter
are questions of law and are reviewed without deference.
Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d
859, 867 (Fed. Cir. 2010).
I
Two claims of the ’154 patent are at issue in this case.
Claim 3 recites a process for verifying the validity of
credit card transactions over the Internet. See J.A. 32
CYBERSOURCE v. RETAIL DECISIONS 6
(’154 Patent Reexamination Certificate), col.2 ll.38–47.
Claim 2 recites a computer readable medium containing
program instructions for executing the same process. See
id. col.2 ll.9–37.
The categories of patent-eligible subject matter are set
forth in § 101, which provides:
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.
35 U.S.C. § 101. Section 100(b) of the Patent Act defines
the “process” category tautologically, stating that:
The term “process” means process, art or method,
and includes a new use of a known process, ma-
chine, manufacture, composition of matter, or ma-
terial.
35 U.S.C. § 100(b). “In choosing such expansive terms . . .
modified by the comprehensive ‘any,’ Congress plainly
contemplated that the patent laws would be given wide
scope.” Bilski, 130 S. Ct. at 3225 (quoting Diamond v.
Chakrabarty, 447 U.S. 303, 308 (1980)).
In interpreting § 101, this court concluded in Bilski
that the “machine-or-transformation” test was the appro-
priate test for the patentability of process claims. 545
F.3d at 943. Thus, we held that a claimed process would
only be “patent-eligible under § 101 if: (1) it is tied to a
particular machine or apparatus; or (2) it transforms a
particular article into a different state or thing.” Id. at
954. We further held that, to satisfy the machine prong of
the test, the use of a machine “must impose meaningful
limits on the claim’s scope.” Id. at 961. Applying this
test, we found that Bilski’s claimed “method of hedging
7 CYBERSOURCE v. RETAIL DECISIONS
risk in the field of commodities trading” was unpatentable
under § 101. Id. at 949, 963–66. The Supreme Court
affirmed our Bilski decision, but in doing so it rejected use
of the machine-or-transformation test as the exclusive
test for the patentability of a claimed process. See Bilski,
130 S. Ct. at 3226. While the “machine-or-transformation
test is a useful and important clue,” the Court stated, it
“is not the sole test for deciding whether an invention is a
patent-eligible ‘process.’” Id. at 3227. The Court declined
to “define further what constitutes a patentable ‘process,’
beyond pointing to the definition of that term provided in
§ 100(b) and looking to the guideposts in [the Court’s
precedents].” Id. at 3232. “The Court’s precedents pro-
vide three specific exceptions to § 101’s broad patent-
eligibility principles: ‘laws of nature, physical phenomena,
and abstract ideas.’” Id. at 3225 (quoting Diamond, 447
U.S. at 309). The Court noted that these judicially cre-
ated exceptions “have defined the reach of the statute as a
matter of statutory stare decisis going back 150 years,”
and are “‘part of the storehouse of knowledge of all men . .
. free to all men and reserved exclusively to none.’” Id.
(quoting Funk Bros. Seed Co. v. Kalo Inoculant Co., 333
U.S. 127, 130 (1948)). In holding that the machine-or-
transformation test is not the exclusive test for a process’s
patent-eligibility, the Supreme Court expressly left open
the door for “the Federal Circuit’s development of other
limiting criteria that further the purposes of the Patent
Act and are not inconsistent with its text.” Id. at 3231.
II
We first address claim 3 of the ’154 patent, which re-
cites a method for verifying the validity of a credit card
transaction over the Internet. Claim 3, as amended
during reexamination, reads in its entirety:
CYBERSOURCE v. RETAIL DECISIONS 8
3. A method for verifying the validity of a credit
card transaction over the Internet comprising the
steps of:
a) obtaining information about other
transactions that have utilized an
Internet address that is identified
with the [ ] credit card transaction;
b) constructing a map of credit card
numbers based upon the other trans-
actions and;
c) utilizing the map of credit card num-
bers to determine if the credit card
transaction is valid.
J.A. 32 (’154 Patent Reexamination Certificate), col.2
ll.38–47. CyberSource acknowledges that the “Internet
address” recited in step (a) of claim 3 “may be, for exam-
ple, an Internet protocol (IP) address or an e-mail address
for the particular credit card transaction.” Appellant’s Br.
7. CyberSource further concedes that the “map of credit
card numbers” recited in step (b) can be as simple as a list
of credit card transactions relating to a particular IP
address. See Appellant’s Br. 9. Finally, step (c) does not
limit claim 3 to any specific fraud detection formula or
mathematical algorithm, but rather broadly purports to
encompass any means of “utilizing the map of credit card
numbers to determine if the credit card transaction is
valid.” J.A. 32, col.2 ll.46–47.
The district court found that claim 3 fails to meet ei-
ther prong of the machine-or-transformation test. Cyber-
Source, 620 F. Supp. 2d at 1078. We agree. As the
district court correctly held, the method of claim 3 simply
requires one to “obtain and compare intangible data
pertinent to business risks.” Id. at 1073. The mere
9 CYBERSOURCE v. RETAIL DECISIONS
collection and organization of data regarding credit card
numbers and Internet addresses is insufficient to meet
the transformation prong of the test, and the plain lan-
guage of claim 3 does not require the method to be per-
formed by a particular machine, or even a machine at all.
We are not persuaded by the appellant’s argument
that the claimed method is tied to a particular machine
because it “would not be necessary or possible without the
Internet.” Appellant’s Br. 42. Regardless of whether “the
Internet” can be viewed as a machine, it is clear that the
Internet cannot perform the fraud detection steps of the
claimed method. Moreover, while claim 3 describes a
method of analyzing data regarding Internet credit card
transactions, nothing in claim 3 requires an infringer to
use the Internet to obtain that data (as opposed to obtain-
ing the data from a pre-compiled database). The Internet
is merely described as the source of the data. We have
held that mere “[data-gathering] step[s] cannot make an
otherwise nonstatutory claim statutory.” In re Grams,
888 F.2d 835, 840 (Fed. Cir. 1989) (quoting In re Meyer,
688 F.2d 789, 794 (CCPA 1982)).
Thus, the district court did not err in holding that
claim 3 fails to meet the machine-or-transformation test.
However, our analysis does not end there. In holding that
the machine-or-transformation test “is not the sole test for
deciding whether an invention is a patent-eligible proc-
ess,” Bilski, 130 S. Ct. at 3227, the Supreme Court has
made clear that a patent claim’s failure to satisfy the
machine-or-transformation test is not dispositive of the §
101 inquiry. Nonetheless, we find that claim 3 of the ’154
patent fails to recite patent-eligible subject matter be-
cause it is drawn to an unpatentable mental process—a
subcategory of unpatentable abstract ideas.
CYBERSOURCE v. RETAIL DECISIONS 10
The Supreme Court has stated that “[p]henomena of
nature, though just discovered, mental processes, and
abstract intellectual concepts are not patentable, as they
are the basic tools of scientific and technological work.”
Gottschalk v. Benson, 409 U.S. 63, 67 (1972) (emphasis
added). In Benson, the patent at issue claimed a method
of programming a general-purpose computer to convert
binary-coded decimal (“BCD”) numbers into pure binary
through the use of a mathematical algorithm. Id. at 65.
The Court focused in part on the mental character of the
claimed process, stating:
The conversion of BCD numerals to pure binary
numerals can be done mentally . . . . The method
sought to be patented varies the ordinary arith-
metic steps a human would use by changing the
order of the steps, changing the symbolism for
writing the multiplier used in some steps, and by
taking subtotals after each successive operation.
The mathematical procedures can be carried out
in existing computers long in use, no new machin-
ery being necessary. And, as noted, they can also
be performed without a computer.
Id. at 67. Thus, in finding that the process in Benson was
not patent-eligible, the Supreme Court appeared to en-
dorse the view that methods which can be performed
mentally, or which are the equivalent of human mental
work, are unpatentable abstract ideas—the “basic tools of
scientific and technological work” that are open to all. Id.
The Supreme Court reaffirmed and extended its Ben-
son holding in the case of Parker v. Flook, 437 U.S. 584
(1978). The patent in Flook claimed a method for calcu-
lating and updating the values of “alarm limits” for
alarms that monitor process variables (such as tempera-
ture) during the catalytic chemical conversion of hydro-
11 CYBERSOURCE v. RETAIL DECISIONS
carbons. Id. at 585–86. The “alarm limits” were thresh-
old values which, if exceeded, would trigger a warning
alarm to sound. The Court characterized the invention as
“simply provid[ing] a new and presumably better method
for calculating alarm limit values.” Id. at 594–95. The
Court noted that the calculations, while “primarily useful
for computerized [applications],” could still “be made
[using a] pencil and paper.” Id. at 586. The Court re-
jected the notion that the recitation of a practical applica-
tion for the calculation could alone make the invention
patentable, stating that any “competent draftsman could
attach some form of post-solution activity to almost any
mathematical formula.” Id. at 590. The Court thus found
the claimed invention unpatentable.
Following the Supreme Court, we have similarly held
that mental processes are not patent-eligible subject
matter because the “application of [only] human intelli-
gence to the solution of practical problems is no more than
a claim to a fundamental principle.” Bilski, 545 F.3d at
965 (quotation marks omitted); see also id. at 952, 960–61.
After our en banc decision in Bilski, this court—relying on
Benson, Flook, and our prior decisions—noted that we
have consistently “refused to find processes patentable
when they merely claimed a mental process standing
alone and untied to another category of statutory subject
matter[,] even when a practical application was claimed.”
In re Comiskey, 554 F.3d 967, 980 (Fed. Cir. 2009). 2 We
concluded:
2 See also In re Schrader, 22 F.3d 290, 291 (Fed.
Cir. 1994) (holding unpatentable a “method constitut[ing]
a novel way of conducting auctions” to maximize total
sales revenue); In re Warmerdam, 33 F.3d 1354, 1355,
1360 (Fed. Cir. 1994) (holding unpatentable a process for
controlling objects to avoid collisions which described
“nothing more than the manipulation of basic mathemati-
CYBERSOURCE v. RETAIL DECISIONS 12
[T]he patent statute does not allow patents on
particular systems that depend for their operation
on human intelligence alone, a field of endeavor
that both the framers and Congress intended to be
beyond the reach of patentable subject matter. . . .
[I]t is established that the application of human
intelligence to the solution of practical problems is
not in and of itself patentable.
Id. Thus, because the method of arbitration claims in
Comiskey essentially sought “to patent the use of human
intelligence in and of itself,” the claims were drawn to
abstract ideas and were invalid under § 101. Id. at 981.
It is clear that unpatentable mental processes are the
subject matter of claim 3. All of claim 3’s method steps
can be performed in the human mind, or by a human
using a pen and paper. Claim 3 does not limit its scope to
any particular fraud detection algorithm, and no algo-
rithms are disclosed in the ’154 patent’s specification.
Rather, the broad scope of claim 3 extends to essentially
any method of detecting credit card fraud based on infor-
mation relating past transactions to a particular “Internet
address,” even methods that can be performed in the
human mind.
First, step (a)—which requires “obtaining information
about other transactions that have utilized an Internet
address that is identified with the [ ] credit card transac-
cal constructs, the paradigmatic ‘abstract idea’”); Grams,
888 F.2d at 836, 840–41 (holding unpatentable “a method
of diagnosing an abnormal condition in an individual”
that comprised performing clinical tests and thinking
about the results); Meyer, 688 F.2d at 795–96 (holding
unpatentable “a mental process that a neurologist should
follow”); In re Maucorps, 609 F.2d 481, 482, 486 (CCPA
1979) (holding unpatentable a method of “optimizing the
organization of sales representatives in a business”).
13 CYBERSOURCE v. RETAIL DECISIONS
tion”—can be performed by a human who simply reads
records of Internet credit card transactions from a preex-
isting database. J.A. 32, col.2 ll.40–42. While the ’154
patent’s specification discusses referencing “a database of
Internet addresses,” ’154 patent, col.3 ll.13–14, Cyber-
Source concedes that claim 3 does not cover the initial
creation of the database. Oral Arg. at 1:15–1:30, avail-
able at http://www.cafc.uscourts.gov/oral-argument-
recordings/all/cybersource.html. Moreover, as discussed
above, even if some physical steps are required to obtain
information from the database (e.g., entering a query via
a keyboard, clicking a mouse), such data-gathering steps
cannot alone confer patentability. Grams, 888 F.2d at
839–40.
Second, a person may “construct[ ] a map of credit
card numbers” as required by step (b) by writing down a
list of credit card transactions made from a particular IP
address. J.A. 32, col.2 ll.43–44. There is no language in
claim 3 or in the ’154 patent’s specification that requires
the constructed “map” to consist of anything more than a
list of a few credit card transactions. This is readily
apparent from the appellant’s brief, in which CyberSource
provides a sample “map” that merely consists of four
listed credit card transactions denoted by their dates,
times, cardholder names, card numbers, IP addresses,
transaction amounts, and shipping addresses. See Appel-
lant’s Br. 9.
Finally, step (c)—which requires “utilizing the map of
credit card numbers to determine if the credit card trans-
action is valid”—is so broadly worded that it encompasses
literally any method for detecting fraud based on the
gathered transaction and Internet address data. J.A. 32,
col.2 ll.45–46. This necessarily includes even logical
reasoning that can be performed entirely in the human
mind. For example, a person could literally infringe step
CYBERSOURCE v. RETAIL DECISIONS 14
(c) by identifying a likely instance of fraud based on the
simple observation that numerous transactions using
different credit cards, having different user names and
billing addresses, all originated from the same IP address.
Indeed, CyberSource’s CEO admitted that, before Cyber-
Source created a computer implemented fraud detection
system, “[w]e could see just by looking that more than
half of our orders were fraudulent.” J.A. 375.
Thus, claim 3’s steps can all be performed in the hu-
man mind. Such a method that can be performed by
human thought alone is merely an abstract idea and is
not patent-eligible under § 101. Methods which can be
performed entirely in the human mind are unpatentable
not because there is anything wrong with claiming mental
method steps as part of a process containing non-mental
steps, 3 but rather because computational methods which
can be performed entirely in the human mind are the
types of methods that embody the “basic tools of scientific
and technological work” that are free to all men and
reserved exclusively to none. Benson, 409 U.S. at 67.
III
We turn next to claim 2 of the ’154 patent, which re-
cites a so-called “Beauregard claim.” A Beauregard
claim—named after In re Beauregard, 53 F.3d 1583 (Fed.
Cir. 1995)—is a claim to a computer readable medium
(e.g., a disk, hard drive, or other data storage device)
containing program instructions for a computer to per-
form a particular process. Claim 2, as amended during
reexamination, reads in its entirety:
3 See In re Abele, 684 F.2d 902, 908 (CCPA 1982)
(finding a claim patentable that included both mental
steps and physical steps).
15 CYBERSOURCE v. RETAIL DECISIONS
2. A computer readable medium containing pro-
gram instructions for detecting fraud in a credit
card transaction between a consumer and a mer-
chant over the Internet, wherein execution of the
program instructions by one or more processors of
a computer system causes the one or more proces-
sors to carry out the steps of:
a) obtaining credit card information re-
lating to the transactions from the
consumer; and
b) verifying the credit card information
based upon values of plurality of pa-
rameters, in combination with infor-
mation that identifies the consumer,
and that may provide an indication
whether the credit card transaction is
fraudulent,
wherein each value among the plurality of
parameters is weighted in the verify-
ing step according to an importance,
as determined by the merchant, of
that value to the credit card transac-
tion, so as to provide the merchant
with a quantifiable indication of
whether the credit card transaction is
fraudulent,
wherein execution of the program instruc-
tions by one or more processors of a
computer system causes that one or
more processors to carry out the fur-
ther steps of;
[a] obtaining information about other
transactions that have utilized an
CYBERSOURCE v. RETAIL DECISIONS 16
Internet address that is identified
with the credit card transaction;
[b] constructing a map of credit card
numbers based upon the other
transactions; and
[c] utilizing the map of credit card
numbers to determine if the credit
card transaction is valid.
J.A. 32 (’154 Patent Reexamination Certificate), col.2 ll.9–
37 (emphases added). While claim 2 contains somewhat
redundant language, it is clear from the emphasized text
that claim 2 recites nothing more than a computer read-
able medium containing program instructions for execut-
ing the method of claim 3.
As discussed above, we found claim 3 to be unpat-
entable because it is drawn to a mental process—i.e., an
abstract idea. The method underlying claim 2 is clearly
the same method of fraud detection recited in claim 3.
Nonetheless, CyberSource contends that claim 2 should
be patentable. CyberSource’s main argument is that
coupling the unpatentable mental process recited in claim
3 with a manufacture or machine renders it patent-
eligible.
CyberSource argues that claim 2 is patent-eligible per
se because it recites a “manufacture,” rather than a
“process,” under the statutory language of § 101. Cyber-
Source contends that, by definition, a tangible, man-made
article of manufacture such as a “computer readable
medium containing program instructions” cannot possibly
fall within any of the three patent-eligibility exceptions
the Supreme Court has recognized for “laws of nature,
physical phenomena, [or] abstract ideas.” Appellant’s Br.
47–48 (quoting Bilski, 130 S. Ct. at 3225). We disagree.
17 CYBERSOURCE v. RETAIL DECISIONS
Regardless of what statutory category (“process, ma-
chine, manufacture, or composition of matter,” 35 U.S.C. §
101) a claim’s language is crafted to literally invoke, we
look to the underlying invention for patent-eligibility
purposes. Here, it is clear that the invention underlying
both claims 2 and 3 is a method for detecting credit card
fraud, not a manufacture for storing computer-readable
information. This case is thus similar to In re Abele, 684
F.2d 902 (CCPA 1982). In Abele, claim 5 of the patent at
issue recited “[a] method of displaying data” comprising
the steps of “calculating the difference” between two
numbers and “displaying the value.” Id. at 908. The
court concluded that claim 5 was not directed to patent-
eligible subject matter because it claimed an abstract
idea. Id. However, claim 7 was argued to be different
because it recited an “[a]pparatus for displaying data”
comprising “means for calculating the differences” be-
tween two numbers and “means for displaying the value.”
Id. at 909 (emphases added). Though claim 7 literally
invoked an “[a]pparatus,” the court treated it as a method
claim for the purpose of its § 101 analysis. Due to its
“broad” and “functionally-defined” nature, the court found
that treating claim 7 as an apparatus claim would “exalt
form over substance since the claim is really to the
method or series of functions itself.” Id. (citation omitted).
Accordingly, the court placed “the burden . . . on the
applicant to demonstrate that the claims [were] truly
drawn to [a] specific apparatus distinct from other appa-
ratus[es] capable of performing the identical functions.”
Id. (citation omitted).
In the present case, CyberSource has not met its bur-
den to demonstrate that claim 2 is “truly drawn to a
specific” computer readable medium, rather than to the
underlying method of credit card fraud detection. To be
sure, after Abele, we have held that, as a general matter,
CYBERSOURCE v. RETAIL DECISIONS 18
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 soft-
ware.” In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994).
But we have never suggested that simply reciting the use
of a computer to execute an algorithm that can be per-
formed entirely in the human mind falls within the Alap-
pat rule. Thus, despite its Beauregard claim format,
under Abele, we treat claim 2 as a process claim for pat-
ent-eligibility purposes.
Analyzing claim 2 as a process claim, CyberSource
first asserts that claim 2 satisfies the transformation
prong of the machine-or-transformation test because it
recites a patentable transformation of data representing
Internet credit card transactions. According to Cyber-
Source, the claimed technique uses an “Internet address”
such as an IP address or e-mail address and constructs a
“map” of credit card numbers from Internet transactions
that have utilized that Internet address. We agree with
the district court that the claimed process manipulates
data to organize it in a logical way such that additional
fraud tests may be performed. The mere manipulation or
reorganization of data, however, does not satisfy the
transformation prong. Thus, claim 2 fails to meet the
transformation test.
CyberSource additionally argues that claim 2 satisfies
the machine prong of the machine-or-transformation test,
since the recited “computer readable medium” contains
software instructions that can only be executed by “one or
more processors of a computer system.” J.A. 32, col.2
ll.12–14. As we stated in Bilski, to impart patent-
eligibility to an otherwise unpatentable process under the
theory that the process is linked to a machine, the use of
19 CYBERSOURCE v. RETAIL DECISIONS
the machine “must impose meaningful limits on the
claim’s scope.” 545 F.3d at 961. In other words, the
machine “must play a significant part in permitting the
claimed method to be performed.” SiRF Tech., Inc. v. Int’l
Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir. 2010).
Here, the incidental use of a computer to perform the
mental process of claim 3 does not impose a sufficiently
meaningful limit on the claim’s scope. As such, the
“computer readable medium” limitation of claim 2 does
not make the otherwise unpatentable method patent-
eligible under § 101. See Grams, 888 F.2d at 840–41
(after finding claims unpatentable for being drawn to a
mental process, the court found that claim 16’s require-
ment “that the [same] method be performed with a pro-
grammed computer” did not alter the method’s
unpatentability under § 101). Abele made clear that the
basic character of a process claim drawn to an abstract
idea is not changed by claiming only its performance by
computers, or by claiming the process embodied in pro-
gram instructions on a computer readable medium. Thus,
merely claiming a software implementation of a purely
mental process that could otherwise be performed without
the use of a computer does not satisfy the machine prong
of the machine-or-transformation test.
That purely mental processes can be unpatentable,
even when performed by a computer, was precisely the
holding of the Supreme Court in Gottschalk v. Benson. As
discussed above, the Supreme Court found in Benson that
a claim to a method of programming a general-purpose
computer to convert BCD numbers into pure binary was
unpatentable because the conversion of BCD numerals to
pure binary numerals “can be done mentally,” 409 U.S. at
65–67, and because the process was “so abstract and
sweeping as to cover both known and unknown uses of the
BCD to pure binary conversion,” id. at 71. The Court
CYBERSOURCE v. RETAIL DECISIONS 20
expressly noted that the algorithm had “no substantial
practical application except in connection with a digital
computer.” Id. The Court reached that conclusion even
though one of the claims the Court found unpatentable
(claim 8) specifically recited the use of a computer read-
able medium, including steps such as “storing the [BCD]
signals in a reentrant shift register”—a physical computer
memory component. Id. at 73–74. Nonetheless, the Court
found that claim 8 was drawn to an unpatentable abstract
idea.
Following Benson, as noted earlier, the Supreme
Court in Flook and Bilski found other method claims
invalid under § 101 for being drawn to abstract ideas. In
so holding, the Court did not indicate that those claims
could have avoided invalidity under § 101 by merely
requiring a computer to perform the method, or by recit-
ing a computer readable medium containing program
instructions for performing the method. 4
This is entirely unlike cases where, as a practical
matter, the use of a computer is required to perform the
4 The Supreme Court in Diamond v. Diehr charac-
terized Flook as a case involving the use of a mathemati-
cal formula in the abstract, regardless of whether the
patent “is intended to cover all uses of the formula or only
limited uses.” 450 U.S. 175, 192 n.14 (1981). Signifi-
cantly, the Diehr Court noted that, in Flook, “the patent
application did not purport to explain how the variables
used in the formula were to be selected, nor did the appli-
cation contain any disclosure relating to chemical proc-
esses at work or the means of setting off an alarm or
adjusting the alarm unit.” Id. The analogy with the
claims in this case is a close one: here, the claims contain
no hint as to how the information regarding the Internet
transactions will be sorted, weighed, and ultimately
converted into a useable conclusion that a particular
transaction is fraudulent. The claims in this case are
therefore even more abstract than the claims in Flook.
21 CYBERSOURCE v. RETAIL DECISIONS
claimed method. For example, in SiRF Tech., we found
that claims to a “method for calculating an absolute
position of a GPS receiver and an absolute time of recep-
tion of satellite signals” recited patent-eligible subject
matter. 601 F.3d at 1331. The court noted that we were
“not dealing with . . . a method that [could] be performed
without a machine” and that there was “no evidence . . .
that the calculations [could] be performed entirely in the
human mind.” Id. at 1333. To the contrary, we found it
was “clear that the methods at issue could not be per-
formed without the use of a GPS receiver.” Id. at 1332.
Similarly, in Research Corp. Techs. v. Microsoft Corp.,
627 F.3d 859 (Fed. Cir. 2010), we upheld the patentability
of a claimed method “for rendering a halftone image of a
digital image by comparing, pixel by pixel, the digital
image against a blue noise mask.” Id. at 868. Because
the method required the manipulation of computer data
structures (e.g., the pixels of a digital image and a two-
dimensional array known as a mask) and the output of a
modified computer data structure (a halftoned digital
image), the method could not, as a practical matter, be
performed entirely in a human’s mind.
In contrast, it is clear in the present case that one
could mentally perform the fraud detection method that
underlies both claims 2 and 3 of the ’154 patent, as the
method consists of only the general approach of obtaining
information about credit card transactions utilizing an
Internet address and then using that information in some
undefined manner to determine if the credit card transac-
tion is valid. Because claims 2 and 3 attempt to capture
unpatentable mental processes (i.e., abstract ideas), they
are invalid under § 101.
AFFIRMED