Defeating the Duo: Jumping to Alice Step Two

COSMOKEY SOLUTIONS GMBH & CO. KG V. DUO SECURITY LLC

Before O’Malley, Reyna, and Stoll.  Appeal from the United States District Court for the District of Delaware.

Summary: Patent claims directed to computer-implemented authentication and verification techniques may survive § 101 challenges if they recite specific improvements that provide particular benefits.

CosmoKey sued Duo Security for patent infringement, asserting claims directed to a method of authenticating a user performing a transaction at a terminal by, among other steps, activating an authentication function on the user’s mobile device.  Duo moved for judgment on the pleadings, arguing that all asserted claims are ineligible under 35 U.S.C. § 101.  The district court found that the patent was directed to the abstract idea of “authentication” and did not recite an inventive concept.  Thus the court found the claims invalid under § 101.  CosmoKey timely appealed to the Federal Circuit. 

Starting with step one of Alice, the Federal Circuit expressed doubt as to the district court’s framing of the claims as “directed to the abstract idea of authentication.”  However, the Federal Circuit declined to determine if the claims were directed to an abstract idea, instead finding that the claims satisfy Alice step two.  The Federal Circuit explained that the claims and specification “recite a specific improvement to authentication that increases security, prevents unauthorized access by a third party, is easily implemented, and can advantageously be carried out with mobile devices of low complexity.”  Accordingly, the Federal Circuit reversed the judgment below.

Judge Reyna concurred with the majority decision to reverse the district court’s judgment but wrote separately to argue that, under Alice step one, the claims at issue are directed to patent-eligible subject matter.  Judge Reyna also heavily criticized the majority’s bypassing of step one of the Alice inquiry as “extraordinary and contrary to Supreme Court precedent.” 

Editor: Paul Stewart

Written by: Ari Feinstein & Daniel P. Hughes