Federal Circuit disposition — 22-1842

N OTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
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IN RE: AUTHWALLET, LLC,
Plaintiff-Appellant
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2022-1842
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 1:21-cv-05463-LJL,
Judge Lewis J. Liman.
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Decided: May 10, 2023
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WILLIAM P ETERSON R AMEY , III, Ramey LLP, Houston,
TX, for plaintiff-appellant.
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Before D YK, SCHALL , and CHEN, Circuit Judges.
SCHALL , Circuit Judge.
D ECISION
AuthWallet, LLC (“AuthWallet”) is the owner of U.S.
Patent No. 9,292,852 (“the ’852 patent”). It sued Block,
Inc., (“Block”) in the United States District Court for the
Southern District of New York for infringement of the pa-
tent. In a decision dated May 3, 2022, the district court
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2 IN RE: AUTHWALLET, LLC
granted Block’s motion to dismiss under Fed. R. Civ. P.
12(b)(6) and dismissed AuthWallet’s complaint. It did so
after finding that the claims of the ’852 patent are directed
to ineligible subject matter under 35 U.S.C. § 101.
AuthWallet, LLC v. Block, Inc., 602 F. Supp. 3d 620
(S.D.N.Y. 2022). Following the entry of final judgment,
AuthWallet appealed.1 We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1). For the reasons set forth below, we
affirm.
D ISCUSSION
I
The ’852 patent is titled “System and Method for Ap-
plying Stored Value to a Financial Transaction.” The pa-
tent is directed to a “computer-implemented method for
processing financial transaction data” in which customers
use “stored value items”—in this context, the digital equiv-
alent of coupons or vouchers—when making a purchase.
’852 patent col. 32 l. 46–col. 33 l. 13, Abstract. Independent
claim 1 is representative of the ’852 patent’s 40 claims. It
provides as follows:
1. A computer-implemented method for pro-
cessing financial transaction data in a computing
system including a processor and a storage area,
the method comprising:
receiving an authorization request generated as a
result of a transaction by a purchaser at a point of
purchase via an acquirer configured to receive au-
thorization requests from a plurality of points of
purchase, wherein the authorization request
1 Following the completion of briefing in this appeal,
Block filed an unopposed motion to withdraw from the case
pursuant to a settlement agreement between the parties.
See Dkt. No. 41. We granted the motion on April 3, 2023.
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IN RE: AUTHWALLET, LLC 3
includes a purchaser identifier and transaction in-
formation, the transaction information including a
transaction amount, and wherein the purchaser
identifier identifies the purchaser that initiated
the transaction;
based on the authorization request, determining
one or more stored value items to apply to the
transaction, wherein each stored value item in-
cludes an associated value,
wherein the one or more stored value items
are selected from a plurality of stored value
items stored in the storage area, and
wherein the plurality of stored value items
includes stored value items provided by a
plurality of different third parties;
transmitting a transaction indication message to a
mobile device associated with the purchaser iden-
tifier, wherein the transaction indication message
includes information about the determined one or
more stored value items;
receiving an indication from a user of the mobile
device that at least one stored value item should be
applied against the transaction;
applying the indicated at least one stored value
item to pay a first portion of the transaction
amount; and
initiating a payment process to pay a remaining
portion of the transaction amount by providing a
modified transaction amount to the acquirer for
submission to a payment association.
Id. col. 32 l. 46–col. 33 l. 13.
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4 IN RE: AUTHWALLET, LLC
II
After AuthWallet filed suit, Block moved to dismiss,
contending that the ’852 patent is directed to patent ineli-
gible subject matter because it claims “a computer-imple-
mented version of a longstanding economic practice:
processing a financial transaction that includes a discount
for the purchaser.” J.A. 98; see also id. at 90–91. Block
argued that the ’852 patent thus failed the two-step analy-
sis set forth in Alice Corp. v. CLS Bank International, 573
U.S. 208 (2014). The district court agreed.
The first step of the Supreme Court’s Alice analysis is
to determine whether a patent claim is directed to an un-
patentable law of nature, natural phenomenon, or abstract
idea. Alice, 573 U.S. at 217. If so, Alice’s second step is to
consider whether the claim nonetheless includes an “in-
ventive concept” sufficient to “transform the nature of the
claim into a patent-eligible application.” Id. (internal quo-
tation marks and citation omitted). The first stage of the
Alice inquiry looks at the focus of the claims or their char-
acter as a whole; the second stage looks more precisely at
what the claim elements add. SAP Am., Inc. v. InvestPic,
LLC, 898 F.3d 1161, 1167 (Fed. Cir. 2018) (internal quota-
tion marks and citations omitted).
The district court began its Alice step one analysis by
stating that the ’852 patent is “directed to the . . . well-es-
tablished business practice of processing payments during
a sales transaction where a benefit, such as a discounted
payment, is given to the purchaser for use in future trans-
actions.” AuthWallet, 602 F. Supp. 3d at 631. The court
noted that “[f]or years, retailers have provided coupons and
other financial incentives to customers during purchase.”
Id. The court observed, “[t]he ’852 Patent simply describes
that that conventional business practice may be effected by
technology rather than by hand.” Id. The district court
found that the sales transaction activity contemplated by
the ’852 patent involved “the abstract concepts of an
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IN RE: AUTHWALLET, LLC 5
intermediary managing and authenticating a transaction
between a consumer and a retailer as well as that interme-
diary managing discounts and benefits—such as coupons—
that are conferred to the consumer during the transaction,
which the consumer can then use on a future occasion.” Id.
at 632. The court concluded that because managing the
processing of online financial data using authorization re-
quests and conferring discounts and benefits to the con-
sumer for future purchases are abstract ideas for the
purposes of 35 U.S.C. § 101, the claims of the ’852 patent
failed under Alice step one. Id. at 634.
Turning to Alice step two, the district court sought to
determine whether the authentication processes and data
storage mechanisms to manage online payment transac-
tions with discounts claimed in the ’852 patent constitute
an inventive concept sufficient to transform the abstract
idea claimed in the patent into a patent eligible applica-
tion. Id. at 634. The court held that they do not. The dis-
trict court agreed with Block that representative claim 1
“merely automates the longstanding business practice of
discounted payment transactions using conventional, ge-
neric computer technology.” Id. The court stated that no
claim of the ’852 patent “recites an inventive concept that
transforms the abstract idea of processing discounts on
payment transactions into a patent-eligible application.”
Id. Accordingly, the district court granted Block’s motion
to dismiss and entered judgment for Block dismissing
AuthWallet’s complaint.
III
We review the grant of a Rule 12(b)(6) motion to dis-
miss under the law of the regional circuit. Nalco Co. v.
Chem-Mod, LLC, 883 F.3d 1337, 1346 (Fed. Cir. 2018). The
Second Circuit reviews Rule 12(b)(6) dismissals for failure
to state a claim de novo. Conopco, Inc. v. Roll Int’l, 231
F.3d 82, 86 (2d Cir. 2000).
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6 IN RE: AUTHWALLET, LLC
Patent eligibility under § 101 is a question of law based
on underlying facts. SAP Am., 898 F.3d at 1166. Section
101 disputes “may be resolved on a Rule 12(b)(6) motion
when there are no factual allegations that, taken as true,
prevent resolving the eligibility as a matter of law.” Uniloc
USA, Inc. v. LG Elecs. USA, Inc., 957 F.3d 1303, 1306 (Fed.
Cir. 2020) (internal quotation marks and citation omitted).
IV
We understand AuthWallet to be making two main ar-
guments on appeal. First, AuthWallet argues that the dis-
trict court improperly overgeneralized the “focus” of the
claims in its Alice step one analysis. Appellant’s Br. 8–9.
AuthWallet contends that “abstractness is determined by
analyzing the claim as a whole, not whether each element
standing alone is abstract.” Id. at 9. According to
AuthWallet, the proper focus of the claims is either “provid-
ing increased fraud security for financial transactions
when a physical device, the credit, debit, or gift card, can-
not be presented to the merchant by the purchaser by
providing out-of-band confirmation,” id. at 6, or it is “a se-
curity protocol where [a] purchaser initiates a transaction,
an authorization request is generated and sent to an inter-
mediary service, the intermediary service generates an in-
formation request that is sent back to a mobile device, [and]
the user of the mobile device in turn confirms the authori-
zation request, typically by selecting a stored value item,”
id. at 10.
Looking at the claims of the ’852 patent, we disagree
with AuthWallet’s asserted “focus” and instead agree with
the district court that the claims are directed to a method
for processing financial transaction data that implements
authorization requests and confers discounts and benefits
upon the consumer. To the extent AuthWallet is arguing
that the court improperly emphasized the “discount” aspect
of the claims, we disagree. Although the claims recite a
step of receiving an “authorization request” pertaining to a
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IN RE: AUTHWALLET, LLC 7
purchase, the method as a whole is directed to steps involv-
ing “stored value items,” e.g., “determining one or more
stored value items to apply,” “transmitting a transaction
indication message [that] includes information about the
. . . stored value items,” “receiving an indication . . . that at
least one stored value item should be applied,” “applying
the indicated at least one stored value item,” and then “in-
itiating a payment process to pay a remaining portion of
the transaction.” ’852 patent col. 32 l. 46–col. 33 l. 13. We
have held to be abstract claims directed to “longstanding
commercial practice[s],” such as collecting and relaying re-
wards program points, cxLoyalty, Inc. v. Maritz Holdings
Inc., 986 F.3d 1367, 1377 (Fed. Cir. 2021), and also “act[s]
ordinarily performed in the stream of commerce,” such as
“the economic act of paying a finder’s fee for a purchase,”
In re Elbaum, No. 2021-1719, 2021 WL 3923280 (Fed. Cir.
2021). We hold similarly here.
To the extent AuthWallet is arguing that the district
court failed to give the “security” aspects of the claims any
weight whatsoever, we disagree. The court clearly ad-
dressed AuthWallet’s “security” argument. The court
noted that the claims “recite a secure transaction method
where consumers can make credit card payments without
physically presenting their cards,” and that the claims “al-
low[] access to discounts in transactions where a credit
card is not presented.” AuthWallet, 602 F. Supp. 3d at 633.
The court correctly concluded that this “security” feature
would not render the claims non-abstract “for the same rea-
son that the patents in Universal Secure Registry were
found to speak to abstract ideas.” Id.; see Universal Secure
Registry LLC v. Apple Inc., 10 F.4th 1342, 1354–55 (Fed.
Cir. 2021) (finding claims that “generically provide[d]” for
the collection of information to perform authentication of a
user in a manner that was “conventional” to be directed to
an abstract idea). Moreover, as the court noted, the claims
of the ’852 patent “do[] not speak to specific or technical
problems and solutions but rather recite[] generic steps
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8 IN RE: AUTHWALLET, LLC
and results.” AuthWallet, 602 F. Supp. 3d at 633. The ad-
dition of another abstract idea does not render the claims
non-abstract. RecogniCorp, LLC v. Nintendo Co., 855 F.3d
1322, 1327 (Fed. Cir. 2017). We therefore agree with the
district court that the claims of the ’852 patent are directed
to abstract ideas.
AuthWallet’s second argument is that the court erred
in its Alice step-two analysis “by not considering the intrin-
sic evidence of record when analyzing for an inventive con-
cept.” Appellant’s Br. 5. AuthWallet contends that “the
inventive aspects of the claimed inventions are evident in
the claims,” which provide “enhanced security . . . based . . .
on the access to a linked mobile device that is not available
on the face a credit card [sic] and where the user of the mo-
bile device confirms the transaction by selecting a value
item.” Id. at 11. We agree with the district court that the
claims fail to recite an inventive concept that would trans-
form the abstract idea into patentable subject matter. The
claims recite well-known and conventional ways to perform
authentication and to apply discounts, concepts that are
not inventive. See Universal Secure Registry, 10 F.4th at
1355.2
CONCLUSION
We have considered AuthWallet’s remaining argu-
ments and find them unpersuasive. For the reasons given
above, we affirm the court’s decision.
2 The claims are therefore unlike those at issue in
CosmoKey Solutions GMBH & Co. Kg v. Duo Security LLC,
15 F.4th 1091, 1098 (Fed. Cir. 2021). In CosmoKey, claims
directed to a “specific improvement to authentication that
increases security, prevents unauthorized access by a third
party, is easily implemented, and can advantageously be
carried out with mobile devices of low complexity,” were
held to recite an inventive concept.
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IN RE: AUTHWALLET, LLC 9
AFFIRMED
COSTS
No costs.
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