IN RE SARADA MOHAPATRA, FEDERAL CIRCUIT 2021 (SOFTWARE PATENTS)

Enabling a credit card user to change the security code on the card by using a web application, to counter credit card fraud, is too abstract to be patent-eligible.

Mr. Mohapatra’s patent application is directed to a method for countering credit card fraud by enabling a cardholder to change the card’s security code at any time by using a card account management facility accessible over the Internet. The claimed method provides that the new security code will be different from the code printed on the card and different from the last recorded code.

Claim 18 of the application, which is representative, recites the following:

18. A method for countering credit card fraud arising from compromised credit card information
by utilizing cardholder changeable card security code (CSC; also known as card verification value
CVV2 or card verification data CVD or card identification code CID or card verification code CVC2)
comprising:

• a) A card issuer enabling change of card security code printed on the card, by
• allowing cardholder to choose a new security code value as often as cardholder wishes,
• facilitating recordation of chosen card security code by the cardholder by providing an internet
  connected card account management facility,
• using most recently recorded card security code to verify subsequent transaction authorization requests without requiring any change in existing credit cards, terminals, equipment, computer software and communication protocols used in transaction authorization, and
• denying transactions when card security code provided during authorization does not match card security code on record;
• b) Cardholder changing card security code any time s/he deems it necessary to mitigate risk from possible card security code compromise, by
• selecting a new security code value to be used as personal secret separate from the card without requiring assistance from any software program running on any device,
• ensuring that selected new security code value is different from the printed code on first change and is different from last recorded code on subsequent changes,
• recording the new card security code value using issuer provided internet connected card account management facility, and
• remembering and providing the new card security code when prompted during subsequent credit card authorizations.

The Federal Circuit held that Mohapatra’s claims are directed to an abstract idea and that the claims do not contain any additional elements sufficient to render them patent eligible.

Mr. Mohapatra contended that his claims are not directed to abstract ideas, because the claims are narrowly
directed to a specific purpose and because they are capable of providing well-defined benefits.

The Federal Circuit stated that neither of those contentions is sufficient to confer patent eligibility on an otherwise abstract idea.

A claim does not cease to be abstract for section 101 purposes simply because the claim confines the abstract idea to a particular technological environment in order to effectuate a real-world benefit.  The abstract idea underlying Mr. Mohapatra’s claims is for an individual to alter the identification code associated with a financial instrument, such as a credit card, to protect against fraud. The fact that the claims are directed to a specific subset of that abstract idea—in this case, enabling a credit card user to change the security code on the card by using a web application—does not render the idea any less abstract.

Moreover, the fact that an abstract idea may have beneficial uses does not mean that claims embodying the abstract idea are rendered patent eligible.

Mr. Mohapatra’s final argument with regard to the section 101 issue is that his claims embody an inventive concept that renders them patentable under step two of the Alice test. He identified the inventive concepts of his invention as making security code numbers changeable, providing for “card account management on web/mobile devices” to update the changes, and using those features to prevent fraud. As the Board concluded, however, those asserted inventive concepts are in fact just the benefits or goals that Mr. Mohapatra contends will flow from the
claimed abstract idea. The claims do not disclose an inventive way by which those goals are to be achieved; instead, they merely announce the goals themselves. That does not constitute an “inventive concept” for purposes of step two of Alice.

Claim 18 recites enabling a cardholder to change the card’s security code and to choose a new security code, but
it does not recite any specific method for doing so. The claim recites using the new security code to validate transactions without altering the card or any of the supporting equipment, but it does not specify how that is to be done. And it recites recording and using the new security code by the “internet connected card account management facility,” but it does not provide any specificity as to what that facility is or how that function will be performed.

The functions of recording, storing, and verifying both the card security code and changes to that code thus
amount to no more than the implementation of an abstract idea on a computer operating in a conventional manner. That is not enough to convert an abstract idea into patent-eligible subject matter.

In summary, it is important to provide details into specific methods.