Transaction Authentication Claims Using Known Computer Components Are Patent Ineligible

In Universal Secure Registry LLC v. Apple Inc., No. 2020-2044 (Fed. Cir. Aug. 26, 2021), the Federal Circuit affirmed the district court’s determination that four patents related to securing credit card transactions without a credit card magnetic strip are patent ineligible under 35 U.S.C. § 101.

At the lower court, Apple moved to dismiss USR’s complaint, arguing all four patents claimed patent-ineligible subject matter. The magistrate judge initially found they are not, finding that “a more secure authentication system” is an improvement to computer functionality. However, the district court disagreed, finding that “the secure verification of a person’s identity” is an abstract idea and the remaining claim elements are not transformative.

The Federal Circuit agreed with the district court. Addressing each patent individually, at Alice Step One, the Federal Circuit determined each patent is directed to authentication, which is an abstract idea using “conventional tools” to perform “generic steps and results.” At Alice Step Two, the Court found the claim elements are not transformative because the specifications describe the individual elements as conventional, and there is no plausible indication that the combination of conventional techniques “achieves more than the expected sum of the security provided by each technique.”