Section 101 attribution of gems to blockchain patent claim invalid | Insights – Holland & Knight | Candle Made Easy

In a recent case decided by the U.S. District Court for the Southern District of New York, plaintiff Max Rady claimed that he developed a method to “record on a blockchain the individual identifying signatures of physical objects that have unique random properties.” Mr. Rady’s method includes:

  1. 3D spatial mapping and spectral analysis to determine each individual identification signature
  2. Recording these signatures on a blockchain so that “users can guarantee the authenticity and provenance of each item’s location and provenance throughout the supply chain, even if significant changes are made to that item”.

According to Mr. Rady, this method allows gemstones such as diamonds to be authenticated “without the need for confirmation from a central authority, no matter how many times the gemstone is cut, polished or otherwise modified”. He claimed this technology in US Patent No. 10,469,250 but retains other aspects as alleged trade secrets.

Mr. Rady sued for infringement of his patent and misappropriation of his trade secrets. The defendants moved to dismiss the patent claims, arguing that the patent claims constituted inadmissible subject-matter.

Defendants argued that the ‘250 patent addressed the idea of ​​collecting, analyzing and storing data. Looking at the computing elements, they stated that the demands for network nodes, processing devices, storage devices, communication subsystems, and blockchains “are similar to computer hardware Alice‘ and that ‘the tracing of physical elements does not make Rady’s claims any less abstract’.

Mr. Rady claimed that the patent uniquely records gemstone data and logs that data on a peer-to-peer network managed by blockchain authentication — in effect, a “fingerprint for a gemstone.” According to the court, this was the collection, analysis and storage of data – a general, uneligible abstract idea. Consequently, the court agreed with the defendants, finding that the ‘250 patent was directed to prohibited subject matter.

In particular, looking at the blockchain discussion, the court found that the patent “does not improve the functionality of storing and processing data in a blockchain. Importantly, a blockchain is merely a ledger maintained and verified over a peer-to-peer network and plaintiff does not describe how the patent improves on blockchains.” In short, the court found that the patent claims to ” the abstract idea of ​​collecting, storing and processing data” without improving the functionality of computers themselves. Accordingly, the court dismissed the suit for patent infringement.

Claim 1 of the ‘250 patent reads:

1. A network node comprising:

one or more processing devices;

a storage device coupled to the one or more processing devices and storing instructions for execution by at least some of the one or more processing devices;

a communications subsystem coupled to the one or more processing devices to communicate with at least one or more other nodes of a peer-to-peer network; and

Item analysis components coupled to the one or more processing devices, the item analysis components comprising at least one imaging device configured to determine spectral analysis data and 3D scan data from measurements generated by the item analysis components;

wherein the one or more processing devices operate to configure the network node to:

Analyzing an instance of a physical item using the item analysis components to determine a unique signature for the instance, wherein the unique signature is determined using 3D spatial mapping to define the unique signature from the spectral analysis data and 3D scan data generated by the Item analysis components are generated the physical item;

determining, using the unique signature, whether the instance of the physical item was previously recorded on a blockchain maintained by the peer-to-peer network to provide item tracking and authentication services, comparing the unique signature provided by the network node is generated, with the previously recorded unique signature using 3D spatial analysis techniques, rotating features of the physical item defined in the unique signature in virtual space to determine a match with features defined in the previously recorded unique signatures are defined; and

recording the instance of the physical item in the blockchain in response to determining whether the instance has been previously recorded.

The case is Rady v De Beers UK Ltd., et al.No. 1:20-CV-02285 (ALC), 2022 WL 976877, (SDNY March 31, 2022).

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