U.S. District Court Disagrees with PTAB

On March 25, 2016, the U.S. District Court for the District of Nevada issued an Order in a case captioned Global Cash Access, Inc. v. NRT Technology Corp., and NRT Technologies, Inc., in which the District Court found the claims to be directed to an abstract idea.  This decision contradicts the U.S. Patent and Trademark Office's Patent Trial and Appeal Board's (PTAB) prior covered business method (CBM) decision, and makes it difficult to identify a standardized manner of applying the guidelines for determining patentable subject matter under 35 U.S.C. § 101.

Procedurally, Plaintiff Global Cash Access, Inc. sued Defendants NRT Technology Corp. and NRT Technologies, Inc. for infringement of U.S. Patent No. 6,081,792, and other unfair trade practices.  Defendants then initiated administrative review proceedings before the PTAB, and the PTAB denied Defendants' petition for a CBM patent review on the basis that the claims more than likely satisfied 35 U.S.C. § 101.  We recently discussed the CBM decision (see "NRT Technology Corp. v. Everi Payments, Inc. (PTAB 2016)").

Defendants have now filed a Motion to Dismiss in the District Court proceeding again alleging that the patent claims an abstract idea, and the District Court ruled opposite that of the PTAB, finding the patent claims to be ineligible under 35 U.S.C. § 101.

The '792 patent subject matter

The '792 patent describes an interesting function for use of automated teller machines ("ATMs") to issue receipts for a "purchase" that can be cashed in at designated locations for cash of the purchase.  A customer can obtain cash from an account via various processes such as an ATM process or a point-of-sale ("POS") process using both debit cards and credit cards.  In its "Description of the Prior Art," the '792 patent notes two so-called problems associated with obtaining cash from prior art ATMs (i.e., via an ATM network).  First, with respect to using a debit/ATM card, a bank typically imposes a daily limit on ATM cash withdrawals.  Second, with respect to using a credit card to obtain cash from an ATM, the '792 patent points out that people often do not recall the personal identification number ("PIN") that is required because they may not regularly use a credit card for that purpose.

According to the '792 patent, neither of these problems is encountered when using the same cards to make purchases, which occur over a POS network, not an ATM network.  With respect to debit/ATM cards, "one can reach [his] ATM limit and not be able to obtain more cash that day from an ATM, but will still be able to purchase goods and services via a point-of sale transaction because of the distinct and separate limit for point-of-sale transactions."  With respect to credit cards, the '792 patent states that PINs are not typically required to make purchases.  (However, while not described in the '792 patent, as credit cards change over to the Chip-enabled technology, many credit card companies are requiring use of PINs).

The '792 patent describes a method in which a cardholder first attempts to obtain money via a first type of transaction (i.e., conducted over an ATM network) and fails because he has exceeded his ATM daily limit or cannot remember the PIN for his credit card and subsequently and successfully obtains money via a second type of transaction (i.e., conducted via a POS network).  But, the cardholder does not obtain cash (or other valuable item) directly from the terminal when using the POS network.  Instead, the terminal informs a nearby money location (such as "cash windows or 'cages' within casinos or racetracks, front desks or concierges of hotels, ticket booths, will-call windows or customer service windows at stadiums, coliseums, theaters, stores, or amusement parks") of the approved transaction.  The terminal may also issue a "script" or "pre-receipt" for the cardholder to take to the money location.  At the money location, the cardholder exchanges the receipt for the cash.  In the preferred embodiment, a check drawn against the cardholder's account is issued at the money location and made payable to the money location owner.

Claim 1 reads:

A method of providing money or an item of value to an account-holder, the method comprising:
    identifying an account to a terminal;
    entering a personal identification number into the terminal;
    requesting money or an item of value based upon the account via a first type of transaction;
    forwarding the first type of transaction to a processor;
    forwarding the first type of transaction from the processor to a first network;
    forwarding the first type of transaction from the first network to a bank;
    making a denial of the first type of transaction due to exceeded pre-set limit;
    forwarding the denial to the processor;
    notifying the account-holder at the terminal of the denial of the first type of transaction, and asking the account-holder if they would like to request the money or item of value via a second type of transaction;
    requesting money or an item of value based upon the account via a second type of transaction;
    forwarding the second type of transaction to the processor;
    forwarding the second type of transaction from the processor to a second network;
    forwarding the second type of transaction from the second network to the bank;
    making an approval of the second type of transaction;
    forwarding the approval to the processor; and
    instructing a money location separate from the terminal to provide money or an item of value to the account-holder.

Patentable Subject Matter at the PTAB

The Defendants, NRT Technology, filed a petition to institute CBM review of the patent at the PTAB.  The PTAB found that the Petitioner oversimplified the challenged claims because the challenged claims are not directed simply to the idea of providing money to an account holder or using trial-and-error until success is achieved.  Rather, the claims are directed to particular methods of providing money to an account holder using an ATM via a POS transaction after an ATM transaction has failed.

Further, the PTAB found that Petitioner's analysis omitted any consideration of the elements of the claims as ordered combinations to determine whether the additional elements transform the nature of the claims into a patent-eligible application.  The PTAB found that it was Petitioner's burden to do so.  Failing to meet this burden, the Petitioner was unable to show that the claims are more likely than not patent-ineligible.

Because the information presented in the Petition did not demonstrate that it is more likely than not that any of the claims challenged is unpatentable, the Petition for instituting a CBM patent review was denied by the PTAB and no trial was instituted.

Patentable Subject Matter at the District Court

The District Court purported to follow the Supreme Court's two-part test to assess whether the patent covers an abstract idea, and stated that the '792 Patent claims a method that, on its face, is a well-established economic practice; the abstract idea of providing money or an item of value to an account-holder.

The District Court found that using an alternative transaction to obtain cash is a longstanding economic practice that aligns with similar commercial practices deemed abstract by the Supreme Court.

Regarding the inventive concept probe, the Plaintiff insisted that the '792 Patent improves existing ATM technologies in casinos by instructing one terminal to perform two different transactions to obtain cash.  But, the District Court noted that the specification described that such separate transactions existed well before the claimed invention.  As an example, individuals unable to obtain cash from an ATM would "still be able to purchase goods and services via a point-of-sale transaction," or could "proceed to a bank outlet to obtain the needed cash."  The District Court found that the claimed steps simply disclose that a second transaction occurs after a first is denied, and, just as where an account-holder needs to visit his or her bank outlet, requires an account-holder to obtain the cash from a separate location.  In short, contrary to Plaintiff's assertions and according to the District Court, Claim 1 does not enable an account holder to obtain cash from an ATM through a second transaction.

The District Court thus found the '792 Patent to be patent-ineligible under § 101, and dismissed the patent infringement claims.

The District Court noted that the PTAB previously found that Defendants had failed to show "that the claims are more likely than not patent-ineligible."  But, in the context of Defendants' Motion to Dismiss, the Court found that Defendants persuasively identified a distilled version of the claims at issue:  "offering an account-holder an alternative way to obtain cash or something of value  -- i.e., when the first transaction is denied, offering to perform a second type of transaction to achieve the same results."

The different holdings by the PTAB and District Court may just show the state of 35 U.S.C. § 101 today -- determinations of patent eligible subject matter are somewhat random and highly subjective.  It may have been the case that the Petitioner in the PTAB proceeding did not prepare a solid challenge, and likely did not do itself any favors by failing to directly identify "the abstract ideas" in the claims.  However, on their face, the claims appear to recite enough details to withstand a § 101 challenge.  The District Court here encourages Defendants if at first you don't succeed, to develop a new "distilled version of the claims" and see if that works.

Global Cash Access, Inc. v. NRT Technology Corp. (D. Nev. 2016)
Order by District Judge Miranda M. Du