Apple, Visa win Fed Circ ruling against secure-payment patent allegations

REUTERS/Dado Ruvic/Illustration
  • Universal Secure Registry alleged infringement of authentication patents
  • USR's patents invalid, Federal Circuit affirms
  • Patents directed to conventional actions performed in generic way

(Reuters) - Apple and Visa convinced the U.S. Court of Appeals for the Federal Circuit on Thursday to affirm a Delaware federal court decision invalidating four patents related to securing electronic payments that they were accused of infringing with the Apple Pay system.

U.S. Circuit Judge Kara Stoll wrote for a unanimous three-judge panel that Universal Secure Registry LLC's patents were invalid because they were directed to abstract ideas, not patentable improvements to computer technology.

USR's attorney Tigran Guledjian of Quinn Emanuel Urquhart & Sullivan said in an email that they "appreciate the Court's careful consideration of our technology and are considering next steps."

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Apple and its attorney Mark Selwyn of Wilmer Cutler Pickering Hale & Dorr didn't immediately respond to a request for comment, nor did Visa or its attorney Steffen Johnson of Wilson Sonsini Goodrich & Rosati.

USR, founded by Kenneth Weiss, a former chief technology officer of a Dell Technologies unit, sued Apple and Visa in 2017, arguing Apple Pay infringed its patents related to a system to authenticate identities for credit-card payments. Visa helped develop Apple Pay and processes transactions made through it with Visa cards, according to the complaint.

Apple and Visa moved to dismiss the complaint, arguing the patents were directed to patent-ineligible abstract ideas. Setting aside a magistrate judge's recommendation, U.S. District Judge Colm Connolly agreed with them last year, finding the patents cover the abstract idea of "the secure verification of a person's identity" without an inventive concept that would save them.

USR argued on appeal that its patents provided innovative solutions to problems from earlier authentication systems, and that Connolly's broad characterization "ignores the patents' other goals, the granularity of the claims' actual limitations, and the unique, technical manner through which those goals are achieved."

Stoll, joined by Senior Circuit Judge Evan Wallach and Circuit Judge Richard Taranto, affirmed Connolly's decision Thursday.

A USR patent covering an authentication system that doesn't require the user to provide personal information was abstract because its claims "simply recite conventional actions in a generic way (e.g., receiving a transaction request, verifying the identity of a customer and merchant, allowing a transaction) and do not purport to improve any underlying technology," Stoll said.

A patent that discloses the use of a cell phone, point-of-sale device, and registry to facilitate financial transactions was invalid because the invention also performed "conventional actions in a generic way" -- in this case, authenticating a user with conventional tools and transmitting that authentication -- without improving technology.

USR's two other patents, related to a system for authenticating identities using a handheld device that transmits authentication information like biometric data to a second device, were directed to the abstract idea of multi-factor authentication using two devices, and didn't provide innovative solutions to specific problems.

All of the patents also lacked a patent-eligible inventive concept, Stoll said.

The case is Universal Secure Registry LLC v. Apple Inc, U.S. Court of Appeals for the Federal Circuit, No. 20-2044.

For USR: Tigran Guledjian and Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan

For Apple: Mark Selwyn of Wilmer Cutler Pickering Hale & Dorr

For Visa: Steffen Johnson of Wilson Sonsini Goodrich & Rosati

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com