Patent lawsuit over jewelry authentication blockchain settled in CAFC based on Article 101

“The system Rady claims may help prevent jewelry counterfeiting, but practicality is not a measure of patent eligibility.” – CAFC

CAFCOn March 27, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued the following decision: Rady v. Boston Consulting Group Upheld a lower court’s invalidation of a patent claim directed to improving the provenance of physical assets via blockchain. Although this decision has been shown to be non-precedential, the application of the abstract idea exception to patentability under 35 U.S.C. It’s definitely an expansion even if you insist on using general-purpose computer hardware.

Rady’s patent claims long-established data collection practices

In 2020, independent inventor Max A. Ruddy filed a lawsuit against Ruddy’s former employer, Boston Consulting Group (BCG) and diamond mining company De Beers, claiming rights to U.S. Patent No. 10469250. woke up. Mapping physical items to blockchain frameworks. News reports about Rady’s charges include Boston Consulting Group and De Beers using Rady’s personal academic research to create a blockchain-based company designed to eliminate industry problems with the supply of counterfeit jewelry. It has been pointed out that the company is suspected of having developed an authentication and tracking tool. Rady also claimed that BCG fired him because of a conflict with De Beers over the potential misappropriation of Rady’s research and development for Tracr, a blockchain platform for jewelry authentication.

The Southern District of New York dismissed Ruddy’s action on BCG’s motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Despite acknowledging that Rady’s system “recorded,” the district court found that the ‘250 patent did not claim an improvement on the underlying blockchain technology.[s] It’s a fingerprint on a gemstone. ” A recent Federal Circuit decision states that “tracking a physical object is[es] dont make [the] There are also less abstract claims. ”

Federal Circuit Court per curium opinion Ladi affirmed the district court’s invalidity of the claims of the ‘250 patent under a two-step patent eligibility test based on Alice vs. Mayo (2014). In the first step, the Court of Appeals found that Rady’s patent claims were directed to abstract concepts, and that they were based on the long-established practice of identifying articles by unique physical characteristics. It was determined that it was just a practical matter. Support for this discovery comes from the specification of the ‘250 patent, which states that the jewelry industry has long understood that many stones have minor imperfections. Additionally, this specification incorporates by reference jewelry websites that disclose that diamonds can be identified from their inherent imperfections.

Patent claims doom due to lack of improvement in underlying blockchain technology

According to the CAFC, the primary shortcoming of Rady’s patent claims was that they recited general procedures and results rather than specific solutions to technical problems. The Court of Appeals found that the ‘250 patent specification did not establish how the claimed article analysis component functioned to determine the unique signature of a physical object.Citing a 2016 Federal Circuit decision Texas Affinity Labs vs. DirecTVthe appellate court noted:

“Essentially, the Rady specification emphasizes . . . the abstract nature of the ideas embodied in… [his] This is because we do not aim to disclose technical improvements to item analysis components, but rather to ensure that such devices are used in the same way as they have been used in the past. ”

On appeal, Ruddy told the Federal Circuit that his invention combines the use of non-invasive, non-reproducible unique identifiers with blockchain technology to address problems that cause losses to the global jewelry industry. It claimed to be the first system to provide authentication and self-attribution functionality. Billions of dollars in lost revenue every year. However, as the Federal Circuit found, “While Rady’s claimed system may be useful in preventing jewelry counterfeiting, practicality is not a measure of patent eligibility.”

Simply applying step 2 of Alice Based on this framework, the Federal Circuit held that Rady’s patent claims did not recite any element that would transform the abstract concept of data collection and storage into a patent-eligible application. Although Rady argued that his claims covered an ingenious combination of multiple item analysis components to capture inherent defects in physical objects, the Federal Circuit held that the ‘250 patent covered various We determined that it did not meaningfully explain how the components are constructed and put together. According to the Court of Appeals, the ‘250 patent only claims a traditional analytical component using existing blockchain technology, and therefore the second step fails. Alice.

Finally, the Federal Circuit rejected Ruddy’s argument that the district court improperly made its determination of patent invalidity at the motion to dismiss stage. Rady’s response to the Rule 12(b)(6) motion to dismiss includes concluding assertions about the use of specialized sensors and the system’s ability to solve complex and long-standing problems felt in many industries. included only. In these circumstances, the Federal Circuit noted that it is not inappropriate for a district court to grant a motion to dismiss when the question of invalidity is answered by undisputed facts of the record.

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