Solutran, Inc. v. Elavon, Inc.
931 F.3d 1161
Fed. Cir.2019Background
- Solutran owned U.S. Patent No. 8,311,945 (the ’945 patent), claiming a method for processing paper checks by: receiving at the merchant POS a data file (with MICR and amount but no images), crediting the merchant’s account, later scanning the paper checks to create images, and using a computer to match images to the data file.
- Solutran sued U.S. Bancorp and Elavon (collectively U.S. Bank) for infringement of claims 1–5; U.S. Bank counterclaimed that the claims were invalid under 35 U.S.C. § 101.
- The district court denied U.S. Bank’s § 101 summary judgment motion, finding the claims were not directed to an abstract idea and alternatively contained an inventive concept (also relying on a PTAB CBM decision that had declined the § 101 challenge at institution).
- The Federal Circuit panel (Chen, Hughes, Stoll) reviewed patent-eligibility de novo and considered representative claim 1, which the parties treated as representative.
- The Federal Circuit held the claims were directed to the abstract idea of crediting a merchant’s account as early as possible while electronically processing a check, and that the claims lacked an inventive concept sufficient to transform the abstract idea into patent-eligible subject matter.
- The court reversed the district court’s denial of U.S. Bank’s § 101 motion; it did not reach obviousness or the willful-infringement cross-appeal.
Issues
| Issue | Solutran's Argument | U.S. Bank's Argument | Held |
|---|---|---|---|
| Whether claims 1–5 of the ’945 patent are directed to patent-eligible subject matter under § 101 (Alice step 1) | Claims are directed to a specific, physical improvement in check-processing (improved funds availability; outsourcing scanning) and thus not an abstract idea | Claims are directed to the abstract idea of crediting a merchant’s account as early as possible while electronically processing a check | Claims are directed to an abstract idea (crediting merchant early); physical steps do not preclude abstraction |
| Whether the claims contain an ‘inventive concept’ that transforms the abstract idea into patent-eligible application (Alice step 2) | The ordered sequence and claimed machine-or-transformation (scanning to create images) supply an inventive concept; claims are novel and nonobvious | The steps are conventional computer/scanner use and routine data-gathering; reordering routine steps is not inventive | No inventive concept: claims use routine, conventional activities (computer, scanner, data file) and mere ordering is insufficient |
| Whether physical handling of checks and processing at different locations saves the claims from being abstract | Physical movement and two-location processing constitute a tangible, technical improvement | Physicality alone does not avoid abstraction; similar physical processes have been deemed abstract | Physical steps do not overcome abstraction when claimed at a high, conventional level |
| Effect of novelty/nonobviousness or prior PTAB CBM decision on § 101 analysis | Novelty/nonobviousness and prior PTAB treatment (CBM institution denial) support eligibility; patent examination findings are persuasive | Patentability under §§ 102/103 distinct from § 101; novelty/nonobviousness do not resolve abstract-idea inquiries | Novelty/nonobviousness and PTAB institution decision do not save claims under § 101; a new abstract idea remains ineligible |
Key Cases Cited
- Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (method of intermediated settlement is an abstract idea)
- Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (laws of nature/abstract ideas exception and two-step framework)
- Bilski v. Kappos, 561 U.S. 593 (fundamental economic practice is an abstract idea)
- Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (ordered transactional steps can be abstract)
- Content Extraction & Transmission LLC v. Wells Fargo Bank, N.A., 776 F.3d 1343 (extracting/storing data from documents is an abstract idea; use of conventional scanners/computers insufficient)
- Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (claims directed to specific improvement in computer functionality are not abstract)
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (claims that solve a problem particular to the Internet can be patent-eligible)
- Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138 (a novel abstract idea remains an abstract idea)