First District Court Decision on Blockchain Technology Patent Eligibility

We have an update to our previous article, as the court in Rady v. Boston Consulting Group, LLC found that a patent directed to blockchain technology covered patent ineligible subject matter under the Alice test for 35 U.S.C. § 101. No. 1-20-cv-02285 (S.D.N.Y. Mar. 13, 2020) at 4-6. To our knowledge, this is the first time any court has specifically dealt with the issue of patent eligibility for blockchain technology. 

In a short opinion, the court determined that the claims were abstract under Step 1 of the Alice test because “Plaintiff’s claims are directed at the abstract idea of collecting, analyzing, and storing data.” Id. at 5. The court opined that “‘network nodes,’ ‘processing devices,’ ‘storage device,’ ‘communication subsystem,’ ‘3D scanning and spatial’ devices, and ‘blockchains’ are similar to the computer hardware in Alice” and therefore abstract. The court further determined that the ability to track physical objects (in this case, gemstones) did not save the claims. Id. 

The court also found that Step 2 of the Alice test was not met because recording and logging unique gemstone data in a “peer-to-peer” network did not improve computer functionality, and the Plaintiff did not describe how the claims improved blockchain technology. Id. at 5-6. Finally, the court concluded that the dependent claims simply pointed to more components that were already known in the industry. Id. at 6.

It is worth noting that the court invalidated this patent despite the use of a blockchain in conjunction with a physical component to create a 3D spatial map of an item (See ’250 Patent at Claim 1) and the inclusion of multiple physical components in dependent claims, such as a “spectral imager,” “light source,” “ranger scanner,” “calibration target,” “HD photography camera” and “scale.” (See ’250 Patent at Claim 2). We will continue to monitor this area, as more decisions are sure to be on the horizon for blockchain technology.