FEDERAL CIRCUIT HOLDS PATENTS DIRECTED TO SYSTEMS AND METHODS FOR USING A BANKCARD DIRECTLY AT A GATE OR TERMINAL OF A MASS TRANSIT SYSTEM PATENT INELIGIBLE UNDER 35 U.S.C. §101

SMART SYSTEMS INNOVATIONS, LLC, v. CHICAGO TRANSIT AUTHORITY, Appeal No. 2016-1233 (Fed. Cir. October 18, 2017).  Before Reyna, Linn, and Wallach.  Appealed from N.D. Ill. (Judge Chang).  (35 U.S.C. §101 (ALICE))

Background:

SSI sued CTA alleging infringement of four of SSI’s patents.  CTA filed a motion for judgment on the pleadings, asserting that SSI’s claims are ineligible under 35 U.S.C. §101.

SSI’s claims can be separated into two groups.  The first group claims systems and methods for using a bankcard directly at a gate or terminal of a mass transit system by scanning the bankcard, comparing the scanned data against a locally-stored “white list” of approved transit accounts, and allowing entry if the card owner is listed as an account holder without immediately having to establish network connectivity to process and charge the account.  The second group claims features relating to the use of conventional bankcards to implement time-based fare rules despite the inability of bankcards to accept and store data.

The district court granted CTA’s motion, reasoning that the claims only cover an abstract concept: “paying for a subway or bus ride with a credit card” and that “claims directed to certain financial transactions … must be categorized as involving abstract ideas,” and the claims lack an inventive concept because they only recite general computer and technological components.

Issue/Holding:

Did the district court err in holding SSI’s claims patent ineligible under 35 U.S.C. §101 as being directed to an abstract idea? (continue reading)

 Summary by:  Jake Beers

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