NY Patent Decisions Blog

Judge Cote Dismisses Complaint that Doesn’t Adequately Allege Infringement of an Abstract Idea

On October 2, 2019, District Judge Denise Cote (S.D.N.Y.) granted Defendant Green Dot Corporation's ("Green Dot") motion to dismiss Plaintiff Western Express Bancshares, Inc.'s ("Western Express") complaint on the grounds that the complaint fails to state a plausible claim of patent infringement and that the patent claims patent-ineligible subject matter under 35 U.S.C. § 101.

The complaint alleges that Green Dot has committed acts of direct, contributory, and induced patent infringement of U.S. Patent No. 8,498,932 ("the '932 patent") in the sale and offering of its Cash Back Visa and Mastercard prepaid and debit cards. The '932 patent claims a method of funds transfer comprising: distributing a card to a purchaser; receiving funds for allocation to an account associated with said card; distributing the funds to a holder of said card; and permitting the holder to furnish personal information of the holder by communicating with the holder and in response, altering a previously dormant capability of at least one money account card apart from withdrawal of funds.

The asserted claims recite activities to be performed by various actors including purchasers, retailers, and/or financial institutions. However, as the Court found, the complaint does not allege that Green Dot directed or controlled such actors or that any of those other actors committed direct infringement. Accordingly, the Court dismissed the claims of direct, contributory, and induced infringement.

Regarding Green Dot's alternative motion to dismiss on the ground that the '932 patent is directed to patent-ineligible subject-matter, the Court found that the '932 patent's claims are broadly directed to methods of funds transfer that are similar to other "fundamental economic practice[s]" that the Supreme Court and the Federal Circuit have held are abstract ideas. The Court was not persuaded by Western Express' argument that the patent claims require physical devices (i.e., a card) and a physical act (i.e., transforming a card from a simple cash card to a card linked to a bank account). The Court further rejected Western Express' argument that the patent claims pass the machine-or-transformation test, finding that the physical card itself is not transformed but rather, the legal obligations and relationships among the card's purchaser, recipients, and financial institutions are changed. Upon concluding that the patent claims recite an abstract idea, the Court granted Green Dot's alternative motion.

Case: Western Express Bancshares, Inc. v. Green Dot Corp., No. 19-cv-04465, Dkt. No. 23 (S.D.N.Y. Oct. 2, 2019).