Cybersource Decision Raises The Patent-Eligibility Bar For Software

On August 16, 2011, the Court of Appeals for the Federal Circuit (CAFC) issued its decision in CyberSource Corp. v. Retail Decisions, Inc., affirming patent-ineligibility of a reexamined software patent. The patent-in-dispute, U.S. Patent 6,029,154, is directed to detecting credit card fraud on the Internet and claims 2 and 3 were at issue. The court's reasoning recognized that software is still patent-eligible after Bilski, but held that the bar has been raised – which has important implications for the software industry.

In analyzing the patent-eligibility of claim 3 - the process claim of the `154 patent - the court first applied the machine-or-transformation test and concluded that claim 3 fails both prongs. Slip. Op. at 8. On the transformation prong, the court asserted that "mere collection and organization of data regarding credit card numbers and Internet addresses" is insufficient for transformation. Slip. Op. at 9. On the machine prong, the court reasoned