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27 August 2021PatentsRory O'Neill

Apple, Visa win Fed Circ appeal over electronic payments

Apple and Visa have won their appeal against a tech company which accused them of infringing secure payment patents with the Apple Pay system.

In a precedential decision issued yesterday, August 26, the US Court of Appeals for the Federal Circuit held that four patents owned by Universal Secure Registry (USR) were invalid.

The decision affirms the earlier findings of the US District Court for the District of Delaware, which had found the patents to be ineligible under section 101.

The four USR patents all cover technology for securing electronic payment transactions. According to USR, its patents “address the need for technology that allows consumers to conveniently make payment-card transactions without a magnetic-stripe reader and with a high degree of security”.

But according to the Federal Circuit, the USR patents cover conventional and generic technology, with each of the patents failing on the US Supreme Court’s Alice/Mayo test for patent eligibility.

In the case of one of the patents, the claims covered a means of verifying the identity of a user making an economic transaction, “for which computers are merely used in a conventional way, rather than a technological improvement to computer functionality itself,” the court ruled.

Another patent, the court found, was simply directed to collecting and examining data in order to authenticate a user’s identity—“an abstract idea, not a technological solution to a technological problem”.

USR disputed this point by arguing that its technology used a novel form of data it called “encrypted authentication information”. But in the court’s view, these data were “merely a collection of conventional data combined in a conventional way that achieves only expected results”.

“Moreover, as we have previously explained, verifying the identity of a user to facilitate a transaction is a fundamental economic practice that has been performed at the point of sale well before the use of … computers and Internet transactions,” the judgment said.

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