Caselas, LLC v. Verifone, Inc., Defyne Holdings, LLC, Synovus Financial Corp., Georgia's Own Credit…

N OTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
CASELAS, LLC,
Plaintiff-Appellant
v.
VERIFONE, INC., DEFYNE HOLDINGS, LLC,
SYNOVUS FINANCIAL CORP., GEORGIA'S OWN
CREDIT UNION,
Defendants-Appellees
______________________
2023-1036, 2023-1038, 2023-1040, 2023-1041
______________________
Appeals from the United States District Court for the
Northern District of Georgia in Nos. 1:21-cv-03480-VMC,
1:21-cv-03828-VMC, 1:21-cv-03829-VMC, 1:21-cv-03834-
VMC, Judge Victoria M. Calvert.
______________________
Decided: May 28, 2024
______________________
MICHAEL SCOTT F ULLER, Garteiser Honea, PLLC, Ty-
ler, TX, argued for plaintiff-appellant. Also represented by
RANDALL T. G ARTEISER , CHRISTOPHER A. H ONEA.
CAROLYN CHANG, Marton Ribera Schumann & Chang
LLP, San Francisco, CA, for VeriFone, Inc. and argued for
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CASELAS, LLC v. VERI FONE, INC. 2
all defendants-appellees.
MARCUS R. CHATTERTON, Balch & Bingham LLP, Bir-
mingham, AL, for defendant-appellee Defyne Holdings,
LLC. Also represented by J AMES T. D AWKINS , IV.
ROBERT L. L EE , Alston & Bird LLP, Atlanta, GA, for de-
fendant-appellee Synovus Financial Corp.
BENJAMIN T HOMPSON, Fish & Richardson P.C., At-
lanta, GA, for defendant-appellee Georgia’s Own Credit
Union. Also represented by ASHLEY BOLT ; N EIL J.
MCN ABNAY , Dallas, TX.
______________________
Before CHEN, L INN, and STARK, Circuit Judges.
L INN, Circuit Judge
Caselas, LLC, appeals the dismissal by the District
Court for the Northern District of Georgia of its complaint
of infringement of U.S. Patent Nos. 7,529,698 (“’698 pa-
tent”), 7,661,585, 9,117,206, 9,117,230, and 9,715,691 (col-
lectively, the “Asserted Patents”) in related cases against
Appellees VeriFone, Inc.; Defyne Holdings, LLC; Synovus
Financial Corp.; and Georgia’s Own Credit Union (collec-
tively, “VeriFone”). See Caselas, LLC v. Verifone, Inc., 624
F. Supp. 3d 1328, 1331 (N.D. Ga. 2022) (dismissing claims
against VeriFone); J. App’x at 22–24 (dismissing actions
Defyne and Georgia’s Own and entering summary judg-
ment in favor of Synovus based on the VeriFone order).
For the reasons that follow, we affirm the district
court’s dismissal of Caselas’s infringement claims for lack
of patent-eligible subject matter under 35 U.S.C. § 101. Be-
cause we write for the parties, we rely on the district court’s
exposition of the facts of the case.
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CASELAS, LLC v. VERI FONE, INC. 3
I. Patent Eligibility
Patent subject matter eligibility “is a question of law,
based on underlying facts.” SAP Am., Inc. v. InvestPic,
LLC, 898 F.3d 1161, 1166 (Fed. Cir. 2018). We analyze el-
igibility under the two-step Alice framework. Alice Corp.
Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 217 (2014). In
step one, we “determine whether the claims at issue are
directed to a patent-ineligible concept.” Id. at 218. Under
this inquiry, we identify “the focus of the claimed advance
over the prior art” to assess if the character of the claim as
a whole, considered in light of the specification, is directed
to excluded subject matter. Intell. Ventures I LLC v. Cap.
One Fin. Corp., 850 F.3d 1332, 1338 (Fed. Cir. 2017) (quot-
ing Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d
1253, 1257 (Fed. Cir. 2016)).
In step two, we “consider the elements of each claim
both individually and ‘as an ordered combination’ to deter-
mine whether the additional elements ‘transform the na-
ture of the claim’ into a patent eligible application.” Alice,
573 U.S. at 217 (quoting Mayo Collaborative Servs. v. Pro-
metheus Lab’ys, Inc., 566 U.S. 66, 78–79 (2012)). Step two
“looks more precisely at what the claim elements add” to
determine if “they identify an inventive concept in the ap-
plication of the ineligible matter to which . . . the claim is
directed.” SAP, 898 F.3d at 1167 (internal quotation marks
and citation omitted). The abstract idea itself cannot sup-
ply the inventive concept, “no matter how groundbreaking
the advance.” Id. at 1170.
A. ’698 Patent
Like the district court, we treat claim 20 of the ’698 pa-
tent as representative of the Asserted Patents’ claims. Ver-
iFone, 624 F. Supp. 3d at 1340. Caselas does not dispute
that claim 20 is representative.
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CASELAS, LLC v. VERI FONE, INC. 4
1. Alice Step One
The district court determined that claim 20 is directed
to the foundational commercial principle of underwriting,
devoid of any patent eligible inventive concept. Id. at 1341.
The district court concluded that as so directed, claim 20
resembles claims that the courts have previously held pa-
tent ineligible. Id. at 1342 (citing Bilski v. Kappos, 561
U.S. 593, 611 (2010) (holding that claims directed to “the
basic concept of hedging, or protecting against risk” are pa-
tent ineligible); FairWarning IP, LLC v. Iatric Sys., Inc.,
839 F.3d 1089, 1094–95 (Fed. Cir. 2016) (holding ineligible
claims that “merely implement an old practice in a new en-
vironment”)).
Caselas argues that the district court overgeneralized
claim 20 by ignoring two key features of the claim: first, the
use of charge-back data and, second, the insertion of that
data at the front end of the transaction process. Caselas
argues that while the claims in Bilski and FairWarning
were drawn to longstanding concepts, claim 20 focuses on
a comparatively new problem in the art and the computer
implementation of a solution to that problem. Caselas con-
tends that this case more closely resembles TecSec, Inc. v.
Adobe, Inc., in which we upheld the eligibility of claims
that provided specific enhancements to a basic computer
operation. See 978 F.3d 1278, 1295–96 (Fed. Cir. 2020).
VeriFone argues that the district court correctly con-
cluded that claim 20 is directed to the abstract underwrit-
ing idea of checking financial history before completing a
transaction. See VeriFone, 624 F. Supp. 3d at 1341–42. Ac-
cording to VeriFone, limiting the use of an abstract idea to
a specific charge-back context does not render the claim
any less abstract. See Content Extraction & Transmission
LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1345,
1347 (Fed. Cir. 2014). VeriFone argues that Caselas can-
not effectively distinguish Bilski and notes that we have
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CASELAS, LLC v. VERI FONE, INC. 5
held ineligible similar claims directed to “collecting and an-
alyzing information for financial transaction fraud.” Bo-
zeman Fin. LLC v. Fed. Rsrv. Bank of Atlanta, 955 F.3d
971, 980 (Fed. Cir. 2020). Finally, VeriFone contends that
TecSec does not control because claim 20 lacks a recitation
of specific structures that enhance a computer operation.
We agree with VeriFone that claim 20 is essentially di-
rected to the abstract idea of underwriting. We also agree
that because underwriting involves checking financial his-
tories before completing a transaction, the incorporation of
data at the front end of the transaction process adds noth-
ing of consequence. In our view, claim 20 invokes a funda-
mental economic principle similar to the abstract ideas of
hedging against commercial risk, Bilski, 561 U.S. at 611–
12, and detecting transaction fraud, Bozeman, 955 F.3d at
980. Although Caselas attempts to distinguish those cases
by arguing that claim 20 solves an online-only problem,
“not all claims purporting to address Internet-centric chal-
lenges are eligible for patent.” DDR Holdings, LLC v. Ho-
tels.com, L.P., 773 F.3d 1245, 1258 (Fed. Cir. 2014).
Further, limiting the use of underwriting to charge-back
data at most “implement[s] an old practice in a new envi-
ronment.” FairWarning, 839 F.3d at 1094. Thus, the fact
that Claim 20 uses charge-back data as an input to the
same checks involved in underwriting does not meaning-
fully distinguish Bilski or Bozeman.
We also agree that Claim 20 is distinguishable from the
claims in TecSec. Caselas’s claim recites standard infor-
mation processing steps at a high level of generality, not
specific improvements to basic computer functionality. See
TecSec, 978 F.3d at 1296. Moreover, because underwriting
is performed before the completion of a transaction, the
step of receiving charge-back data on a computer at the
front end of a transaction amounts to nothing more than
the use of a computer as a tool to implement underwriting.
See Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350,
1354 (Fed. Cir. 2016). Claim 20 contains neither a specific
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CASELAS, LLC v. VERI FONE, INC. 6
improvement to basic computer functionality nor any en-
hancement to a basic computer operation.
We next turn to step two of the Alice framework.
2. Alice Step Two
The district court correctly framed the step two inquiry
as a search for an inventive concept that ensures the claim
amounts to significantly more than a patent on an abstract
idea. VeriFone, 624 F. Supp. 3d at 1342. The district court
reasoned that the claim’s application of prior charge-back
data at “an unconventional juncture” was not inventive be-
cause “underwriting always occurs before a transaction.”
Id. The district court concluded that claim 20 does not re-
cite an inventive concept that would render the claims pa-
tent eligible at Alice step two.
Caselas argues that the district court erred by failing to
accept as true the intrinsic record’s specific factual allega-
tions of unconventionality. Caselas’s complaint alleges
that industry actors did not use charge-back data as an im-
portant payment processing data point until nearly a dec-
ade after the ’698 patent’s date of invention. J. App’x at
307–08. Caselas also argues that the ’698 patent’s applica-
tion of charge-back data at the front end is inventive. Ver-
iFone argues that reciting nothing more than the abstract
idea of underwriting does not add an inventive concept at
step two. SAP, 898 F.3d at 1170.
We agree with VeriFone. Placing charge-back data at
the front end of the transaction process does not add an
inventive concept because, as the district court noted,
checking account history before completing a transaction
simply invokes the concept of underwriting. VeriFone, 624
F. Supp. 3d at 1342. A claim’s “use of the ineligible concept
to which it is directed cannot supply the inventive concept.”
BSG Tech LLC v. BuySeasons, Inc., 899 F.3d 1281, 1290
(Fed. Cir. 2018). Moreover, the argument that the claimed
invention is unconventional based on the fact that industry
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CASELAS, LLC v. VERI FONE, INC. 7
actors did not check charge-back histories until nearly a
decade after the ’698 patent’s date of invention is of no con-
sequence. See SAP, 898 F.3d at 1170 (noting that patent
law does not protect abstract claims “no matter how
groundbreaking the advance”); BSG, 899 F.3d at 1291 (ex-
plaining that at step two, “[a]s a matter of law, narrowing
or reformulating an abstract idea does not add ‘signifi-
cantly more’ to it”). For these reasons, we conclude that
nothing in representative claim 20 adds an inventive con-
cept that would transform the claim into more than an ab-
stract idea.
We have carefully considered Caselas’s other argu-
ments but do not find them persuasive.
CONCLUSION
For the foregoing reasons, the district court’s decision
is affirmed.
AFFIRMED
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