En Banc Petition: Counting to Two Alice Style

by Dennis Crouch

Apple Inc. v. Universal Secure Registry LLC, Docket No. 20-01223 (Fed. Cir. 2021)

In August, the Federal Circuit sided with Apple and affirmed the district court determination that USR’s asserted claims were all directed to abstract ideas — and thus ineligible under 35 U.S.C. § 101. When I first wrote about the original decision, I noted the high correlation between the two steps of Alice: “if a claim fails step one, it usually fails step two as well.”  However, this particular decision stood-out because of the extent that the step-one analysis “borrow heavily from typical step two analysis.”  Crouch, When Two become One, Patently-O (Aug 29, 2021).

USR has now petitioned for en banc rehearing, and focused-in on the panel’s overlapping analysis regarding step one and step two. Questions presented:

  1. Whether step one of the Alice test for patentable subject matter requires a showing of “specificity,” “unexpected results” or unconventional claim elements.
  2. Whether the two steps of the Alice test are distinct requirements that must both
    be separately met to invalidate a patent claim.

USR Apple Petition.

Alice Corp v. CLS Bank: When Two Become One

The patents at issue are related to securing electronic payments without giving a merchant your actual credit card number. The merchant is given a time-varying code instead of a credit card number.  That code is then sent to the credit card company servers for authorization, including any restrictions on transactions with the merchant.  The company then either approves or denies the transaction.  This approach allows for purchases without actually providing the merchant with the “secure information” such as the credit card or account number.

In rejecting the claims, the court noted that cases “often turn[] on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself.” Universal Secure Registry LLC v. Apple Inc., 10 F.4th 1342 (Fed. Cir. 2021). I read this as requiring: (1) that the claims be drafted with specificity; and (2) that the element claimed by an “improvement to computer functionality.”  Generic claims are not enough; neither are specific claim limitations directed toward elements already well known in the art. The court found that the claims were directed toward “conventional actions in a generic way.”  That conventional-generic combination was enough to fully answer both steps of the Alice analysis.

USR’s petition argues that the decision improperly conflates the two steps of Alice:

At step one, the panel imposes a heightened “specificity” requirement for patents on authentication technology; requires “unexpected results” and “unconventionality”; and imports into Section 101 the definiteness requirement of Section 112—none of which has any basis in the statute or Supreme Court precedent. At step two, the panel opinion collapses Alice/Mayo’s two distinct steps into one by applying the same analysis as at step one.


The petition here was filed prior to the Federal Circuit’s recent decision in CosmoKey Sols. GmbH & Co. KG v. Duo Sec. LLC, 2020-2043, 2021 WL 4515279 (Fed. Cir. Oct. 4, 2021).  In that case, the majority skipped Alice Step One, but then relied upon seeming step-one analysis to make a determination regarding Alice Step Two.  Both decisions were authored by Judge Stoll.

= = = = =

Claim 22 of U.S. Patent Nos. 8,856,539:

A method for providing information to a provider to enable transactions between the provider and entities who have secure data stored in a secure registry in which each entity is identified by a time-varying multi character code, the method comprising:

receiving a transaction request including at least the time-varying multicharacter code for an entity on whose behalf a transaction is to take place and an indication of the provider requesting the transaction;

mapping the time-varying multicharacter code to an identity of the entity using the time-varying multicharacter code;

determining compliance with any access restrictions for the provider to secure data of the entity for completing the transaction based at least in part on the indication of the provider and the time-varying multicharacter code of the transaction request;

accessing information of the entity required to perform the transaction based on the determined compliance with any access restrictions for the provider, the information including account identifying information;

providing the account identifying information to a third party without providing the account identifying information to the provider to enable or deny the transaction;

and enabling or denying the provider to perform the transaction without the provider’s knowledge of the account identifying information.

5 thoughts on “En Banc Petition: Counting to Two Alice Style

  1. 3

    I doubt if the Fed. Cir. wants to wade into the Alice two step dance quagmire en banc again, especially without a more appealing case.

    1. 3.1

      I agree with you – the last time that they ventured in, they merely revealed just how fragmented they are.

    1. 2.1

      Interesting time to bring up the Chevron doctrine of agency statutory interpretation, in view of prior predictions the present Sup. Ct. would eliminate it, and the 3 pending APA suits attacking the PTO’s interpretation of PTAB APJ discretionary authority to deny otherwise statutory post-grant proceeding institutions without any formal rules.
      [P.S. surprised the cited article Harvard article does not mention what I understood to be another Chevron factor: whether or not a statute ambiguity is being interpreted by the agency assigned to operate and do rulemaking under that particular statute?]

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