Method of Using Existing Bank Cards to Access Mass Transit Fails Both Alice Steps

In Smart Sys. Innovations, LLC v. Chi. Transit Auth., No. 2016-1233, the Federal Circuit affirmed the district court’s decision holding that the claims at issue are directed to a patent ineligible abstract idea under 35 U.S.C. § 101.

Smart System Innovations, LLC (“SSI”) asserted three patents, all of which are directed to accessing mass transit systems using existing bankcards. The district court found the asserted claims directed to the “abstract idea of collecting financial data.” The Federal Circuit agreed, finding first that the asserted claims fail step one of the Alice test because they are directed to collecting, storing, and recognizing data, which were similarly held to be an abstract idea in previous decisions.  The Court next found that the asserted claims failed step two of the Alice test because merely adding computer hardware elements to an abstract idea does not satisfy the inventive concept requirement. Therefore, the Court concluded that the asserted claims are directed to a patent-ineligible subject matter under § 101.

Judge Linn dissented, reasoning that the claims are directed to an inventive combination of elements which overcame the latency and connectivity problems in the prior art and that the claims were specifically directed to a transit system.