United States: Federal Circuit Finds Loyalty Rewards Claims Ineligible
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In cxLoyalty, Inc. v. Maritz Holdings Inc., Appeals 2020-1307, -1309 (Fed. Cir. Feb. 8, 2021), the Federal Circuit affirmed a PTAB final written decision in a CBM proceeding canceling Maritz's original claims related to a GUI for a customer loyalty program, as ineligible for patenting under 35 U.S.C. § 101. The PTAB had granted Maritz's request to substitute amended claims, but the court reversed, concluding those claims also are ineligible under section 101.
Customer loyalty programs were known before the invention of the patent (the '087 patent). In those programs, a customer may be provided "with a limited listing of rewards from selected redemption vendors in the form of merchandise, certificates, or other products or services (henceforth referred to as rewards) and the number of points needed to obtain one of the rewards." '087 patent column 1, lines 24-29. The customer could then select the reward, and the loyalty program would obtain the reward for the customer.
Maritz's original claims (claims 1-15) recited a graphical user interface (GUI) for conducting such a transaction between a customer, a loyalty rewards program, and a vendor. Independent claim 1 specified hiding the program account from the customer so that, from the customer's perspective, the transaction was conducted in points. For the vendor, however, the transaction was conducted in a currency amount, enabling the loyalty rewards program and the vendor to transact at a price lower than that perceived by the customer.
As an initial matter, the court determined that claim 1 was "directed to transfers of information relating to a longstanding commercial practice," and thus was directed to an abstract idea. cxLoyalty, Inc. at 16.
Maritz argued that the PTAB should have found claim 1 subject matter eligible because claim 1 concealed the nature of the transaction from the customer so that the customer would not know the actual price of the transaction. The court disagreed, stating that claim 1 did not require that the actual dollar amount be hidden from the customer; and, even if it did, the requirement would also be part of the abstract idea.
Maritz further argued that claim 1 recited a novel combination of elements that provided a technical solution to a technical problem. The court disagreed, stating that the claims simply recited generic and conventional computer components to carry out the abstract idea. In this regard, the court further explained that claim 1 simply replaced a human intermediary with a GUI and application programming interface (API). Accordingly, the court affirmed the PTAB's decision to cancel the original patent claims.
The court, however, reversed the PTAB's decision to allow Maritz's substitute claims (claims 16-23). Maritz's proposed substitute claims generally specified: (a) instructions for converting the format of information at the vendor side to a GUI format, or (b) GUI communication features permitting points-based purchases from multiple vendor systems. The PTAB had decided that these claims were eligible under section 101 because cxLoyalty offered no evidence in support of its opposition, whereas Maritz offered expert testimony. The court, however, reversed the PTAB's decision. The court rejected Maritz's arguments that the substitute claims recite a technical solution to a technical problem, as Maritz did not argue that "the claimed invention improves the use of computers as a tool by reciting a new way for computers to conduct format conversion." Id. at 20; see also, id. at 23. Further, it wasn't enough, according to the court, that Maritz's expert testified that the claimed invention as a whole was novel, as the court has already rejected that as a basis for surviving a section 101 challenge. Id. at 21–22 (citing SAP Am., Inc. v. In-vestPic, LLC, 898 F.3d 1161, 1163 (Fed. Cir. 2018)).
This decision may help patentees and applicants better ensure claims vulnerable to a section 101 challenge survive. For example, to better ensure survivability, claims should recite a technical solution to a technical problem, such as an improvement in the use of a computer, operating outside its normal and expected manner, as a tool to accomplish a desired result. Expert testimony regarding the technical solution is likely not enough—the technological solution should be actually recited in the claims.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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