Smart Systems Innovations, LLC v. Chicago Transit Authority
873 F.3d 1364
| Fed. Cir. | 2017Background
- SSI sued Chicago Transit Authority and others alleging infringement of four patents covering methods/systems to use conventional bankcards for mass-transit fare access and fare processing; District Court granted judgment on the pleadings that asserted claims were §101-ineligible; this appeal followed.
- The patents fall into two groups: the ’003 and ’617 patents (validate/authorize entry at a turnstile using locally-stored identifiers/white lists and bankcard readers) and the ’816 and ’390 patents (processing/funding/timepass logic for fares using bankcards).
- Representative method claims recite steps like downloading bankcard records (or hash identifiers), reading bankcard data, comparing to a list, verifying with a verification system if not found, and denying or allowing access; other claims recite processor/memory, balance classes, fare rules, and timepass processing.
- The district court and majority applied the two-step Alice/Mayo framework: (1) are the claims directed to an abstract idea? (2) if so, do the claims add an "inventive concept" beyond well-understood, routine, conventional components?
- The Federal Circuit majority held the asserted claims directed to abstract ideas (collection/recognition/formation of financial transactions) and that the claimed computer components were generic, so the claims lacked an inventive concept and are ineligible under §101.
- Judge Linn concurred in part and dissented in part: he would find the ’003 and ’617 claims patent-eligible (not directed to an abstract idea when read as a whole and in view of the specification) but agreed the ’816 and ’390 claims are ineligible under existing precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether asserted claims are directed to an abstract idea under Alice step one | SSI: claims operate in the physical world, solve concrete transit latency/connectivity problems, and are not mere abstract ideas | CTA: claims recite collection/recognition/formation of financial-transaction data and thus are abstract | Held: claims are directed to an abstract idea (data collection/financial transaction formation) |
| Whether claims supply an "inventive concept" under Alice step two | SSI: claims solve technological problems in the transit context and use unconventional arrangements (e.g., white lists, hashing, processor/memory) | CTA: recited components (processor, memory, hash identifier, token reader) are generic and routine; no inventive concept | Held: no inventive concept — generic computer implementation cannot transform abstract idea into patent-eligible subject matter |
| Whether representative claims chosen for analysis were appropriate | SSI: court should consider different system/method or dependent claims for eligibility | CTA: representative claims capture the invention and system/method pairs rise or fall together | Held: representative claims were appropriate; analysis covers claim 1s and challenged dependents sufficiently |
| Whether other indicia (preemption, machine-or-transformation) save eligibility | SSI: no undue preemption; claims tie to machines or transform data; they are concrete | CTA: preemption concerns are moot once ineligible; machine-or-transformation test not met because only generic computers are recited | Held: additional indicia do not show eligibility; machine-or-transformation clue favors ineligibility here |
Key Cases Cited
- Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014) (establishes two-step framework for §101)
- Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012) (related guidance on law-of-nature/abstract-idea exceptions and the inventive-concept inquiry)
- Diamond v. Diehr, 450 U.S. 175 (1981) (computer-implemented process solving a technological problem may be eligible)
- Bilski v. Kappos, 561 U.S. 593 (2010) (scope of §101 and limits on abstract ideas)
- Benson v. Kramer, 409 U.S. 63 (1972) (mathematical algorithms and abstract ideas not patentable)
- Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) (claims directed to specific improvements in computer functionality can be eligible)
- Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) (collecting information treated as abstract)
- Content Extraction & Transmission LLC v. Wells Fargo Bank, N.A., 776 F.3d 1343 (Fed. Cir. 2014) (claims for extracting and organizing information are abstract)
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (claims rooted in computer technology addressing Internet-specific problems can be eligible)
- buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014) (generic computer components do not confer eligibility)