October 14, 2019

S.D.N.Y.: Money Transfer Patent Directed to Patent-Ineligible Subject Matter

Holland & Knight Section 101 Blog
Anthony J. Fuga

Western Express Bancshares (WEB) alleged that Green Dot’s sale of debit cards infringed WEB’s patent, which was directed to a method of transferring money through a bank card where (1) the card was linked to a bank account, (2) the card’s purchaser would add money to the bank account, and (3) the card’s purchaser would transfer additional money from the linked bank account to the bank card in an amount greater than the amount that was pre-loaded on the card. So, in short, the bank card was not limited to a certain pre-loaded amount.

Green Dot moved to dismiss WEB’s complaint on multiple grounds, including that WEB’s patent was directed to patent-ineligible subject matter. The court agreed with Green Dot.

The court found that the asserted claims were broadly directed to a "method of funds transfer" and that this concept of transferring money through a bank card was similar to other "fundamental economic practices" that the Supreme Court and Federal Circuit have held to be abstract ideas.

The court also found that the asserted claims do not describe how the card technology will be transformed. Instead, the patent "relies on existing technologies and infrastructures that are inherent to the industries of banking and retail." The patent claims were “directed to the receipt, storage, and distribution of money by, in, and through existing technologies like retail stores, banks, and ATMs, the internet or telephone."

WEB argued that the patent was not directed to an abstract idea because (1) the purchase, use, and transformation of the card could not be done by mere thought, and (2) the card was a "physical device." This did not persuade the court. "The abstract idea exception does not turn solely on whether the claimed invention comprises physical versus mental steps." The court further noted that the Federal Circuit "has made clear that claims that are directed to the collection, storage, and recognition of data are directed to an abstract idea."

Claim 17 of the asserted patent reads:

A method of transfer comprising:

a. purchasing at least one money account card having specified capabilities from a retailer;

b. on or after the purchase of the money account card, depositing funds into a predetermined account associated with the money account card;

c. distributing the money account card to a holder, and

d. requiring personal information of the holder other than a PIN, by communicating with the holder through an ATM, Internet connection or telephone call, and in response, activating a previously dormant capability of the money account card apart from withdrawal of funds.

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