  United States Court of Appeals
      for the Federal Circuit
                ______________________

      SMART SYSTEMS INNOVATIONS, LLC,
               Plaintiff-Appellant

                           v.

    CHICAGO TRANSIT AUTHORITY, CUBIC
   CORPORATION, CUBIC TRANSPORTATION
   SYSTEMS, INC., CUBIC TRANSPORTATION
         SYSTEMS CHICAGO, INC.,
              Defendants-Appellees
             ______________________

                      2016-1233
                ______________________

   Appeal from the United States District Court for the
Northern District of Illinois in No. 1:14-cv-08053, Judge
Edmond E. Chang.
                ______________________

               Decided: October 18, 2017
                ______________________

    MARC J. PERNICK, Mauriel Kapouytian Woods LLP,
San Francisco, CA, argued for plaintiff-appellant. Also
represented by SHERMAN KAHN, New York, NY; WILLIAM
N. HEBERT, Calvo Fisher & Jacob LLP, San Francisco,
CA.

    KRISTOPHER L. REED, Kilpatrick Townsend & Stockton
LLP, Denver, CO, argued for defendants-appellees. Also
represented by DAVID E. SIPIORA, JEFFREY M. CONNOR.
2           SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



                  ______________________

     Before REYNA, LINN, and WALLACH, Circuit Judges.
    Opinion for the court filed by Circuit Judge WALLACH.
Opinion dissenting in part and concurring in part filed by
                  Circuit Judge LINN.
WALLACH, Circuit Judge.
     Appellant Smart Systems Innovations, LLC (“SSI”)
sued Appellees Chicago Transit Authority et al. (collec-
tively, “Appellees”) in the U.S. District Court for the
Northern District of Illinois (“District Court”), alleging
infringement of U.S. Patent Nos. 7,566,003 (“the ’003
patent”), 7,568,617 (“the ’617 patent”), 8,505,816 (“the
’816 patent”), and 8,662,390 (“the ’390 patent”) (collective-
ly, “the Patents-in-Suit”). 1 Appellees responded by filing
a motion for judgment on the pleadings, asserting that
various claims of the Patents-in-Suit (“the Asserted
Claims”) 2 are patent ineligible under 35 U.S.C. § 101
(2012). 3 The District Court granted Appellees’ Motion,
holding that the Asserted Claims are directed to an
abstract idea and otherwise lack an inventive concept,
such that they are patent ineligible under § 101. See


     1  The suit below involved another patent, U.S. Pa-
tent No. 5,828,044, that is not at issue here.
    2   The Asserted Claims include claims 1–4, 6–7, 9,
14–18, 22–26, 29–30, 34, 37–40, 44–47, 49, 51, 58–59, and
68 of the ’003 patent; claims 1, 6, 10, 13–15, 21–22, 28–29,
and 32–36 of the ’617 patent; claims 1–2, 4–6, 8–13, 21,
24–26, 28, and 31–34 of the ’816 patent; and claims 1, 4–
5, 7–10, 13–19, 22, 25, 27–28, and 31 of the ’390 patent.
J.A. 177 n.5.
    3   Congress did not amend § 101 when it passed the
Leahy-Smith America Invents Act. See generally Pub. L.
No. 112-29, 125 Stat. 284 (2011).
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.        3



Smart Sys. Innovations, LLC v. Chi. Transit Auth., No.
1:14-cv-08053, 2015 WL 4184486, at *7 (N.D. Ill. July 10,
2015). The District Court later entered final judgment as
to the Asserted Claims pursuant to Federal Rule of Civil
Procedure 54(b). 4 J.A. 1−2.
   SSI appeals.      We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1) (2012). We affirm.
                        DISCUSSION
                  I. Standards of Review
    We review a district court’s judgment on the pleadings
under the law of the regional circuit, here the Seventh
Circuit. See RecogniCorp, LLC v. Nintendo Co., 855 F.3d
1322, 1325−26 (Fed. Cir. 2017). The Seventh Circuit
reviews de novo the entry of judgment on the pleadings.
See Barr v. Bd. of Trs. of W. Ill. Univ., 796 F.3d 837, 839
(7th Cir. 2015). In so doing, the Seventh Circuit “tak[es]
the facts alleged in the complaint as true and draw[s] all
reasonable inferences in favor of the plaintiff.” Matrix IV,
Inc. v. Am. Nat’l Bank & Tr. Co., 649 F.3d 539, 547 (7th
Cir. 2011) (citation omitted).
    We review issues “unique to patent law,” including
patent eligibility under 35 U.S.C. § 101, consistent with
our circuit’s precedent. Madey v. Duke Univ., 307 F.3d
1351, 1358 (Fed. Cir. 2002). A district court’s determina-
tion of patent eligibility under § 101 is an issue of law
that we review de novo. See Intellectual Ventures I LLC v.
Erie Indem. Co., 850 F.3d 1315, 1325 (Fed. Cir. 2017).




    4   Rule 54(b) states that “[w]hen an action presents
more than one claim for relief . . . , the court may direct
entry of a final judgment as to one or more, but fewer
than all, claims . . . only if the court expressly determines
that there is no just reason for delay.”
4          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



II. The Asserted Claims of the Patents-in-Suit Are Patent-
             Ineligible Under 35 U.S.C. § 101
    “Whoever invents or discovers any new and useful
process, machine, manufacture, or composition of matter,
or any new and useful improvement thereof, may obtain a
patent therefor, subject to the conditions and require-
ments of” Title 35 of the United States Code. 35 U.S.C.
§ 101. “The Supreme Court, however, has long interpret-
ed § 101 and its statutory predecessors to contain an
implicit exception: laws of nature, natural phenomena,
and abstract ideas are not patentable.” Content Extrac-
tion & Transmission LLC v. Wells Fargo Bank, Nat’l
Ass’n, 776 F.3d 1343, 1346 (Fed. Cir. 2014) (internal
quotation marks and citation omitted).
    The Supreme Court’s decision in Alice Corp. Pty Ltd.
v. CLS Bank International provides the framework
through which we assess patent eligibility under § 101.
See 134 S. Ct. 2347, 2354–55 (2014). A patent
    claim falls outside § 101 where (1) it is “directed
    to” a patent-ineligible concept, i.e., a law of na-
    ture, natural phenomenon, or abstract idea, and
    (2)[] if so, the particular elements of the claim,
    considered “both individually and ‘as an ordered
    combination,’” do not add enough to “‘transform
    the nature of the claim’ into a patent-eligible ap-
    plication.”
Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353
(Fed. Cir. 2016) (quoting Alice, 134 S. Ct. at 2355). It is
against this framework that we analyze the Asserted
Claims. 5



    5   The dissent states that we “engag[e] in a reduc-
tionist exercise” that “ignor[es] the limitations of the
claims in question.” Dissent at 1−2. We apply the test
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.      5



                 A. The Asserted Claims
    The Patents-in-Suit “tackle” various “problems that
had proven intractable to the [mass] transit sector.”
Appellant’s Br. 17 (discussing the ’003 and ’617 patents);
see id. at 24 (discussing similarly the ’390 and ’816 pa-
tents). SSI sought to overcome these problems with
inventions designed to implement open-payment fare
systems in mass transit networks in the United States.
See SSI, 2015 WL 4184486, at *1. “An open-payment fare
system allows riders to conveniently and quickly access
mass transit by using existing bankcards,” such as debit
and credit cards, thereby “eliminat[ing] the need for, and
added operational cost of, dedicated fare-cards,” paper
tickets, and tokens. Id.; see, e.g., ’003 patent, Abstract.
    Entitled “Learning Fare Collection System For Mass
Transit,” the ’003 and ’617 patents generally relate to “a
system and method for regulating entry in a transit
system using information from a bankcard, such as a
credit card or debit card.” ’003 patent, Abstract; see ’617
patent, Abstract (similar).     Entitled “Public Transit
System Fare Processor For Multi-Balance Funding,” the
’816 and ’390 patents generally relate to “a system and
method for processing transfer rides associated with at
least one public transit network,” which “preprocess
transactions to consolidate or eliminate unnecessary
transactions with a financial institution clearing and




established by the Supreme Court as articulated in Alice
because we are not permitted to do otherwise, even if we
were to agree with some of the frustrations expressed by
the dissent as to existing § 101 precedent. See, e.g.,
Dissent at 2–7. That we may disagree with the dissent
whether the Asserted Claims are patent-eligible does not
mean we have ignored the content of those claims.
6          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



settlement network.” ’816 patent, Abstract; ’390 patent,
Abstract (same). 6
    Consistent with the District Court, we treat the fol-
lowing claims from each of the Patents-in-Suit as repre-
sentative of their content. 7 SSI, 2015 WL 4184486, at *4;
see Elec. Power, 830 F.3d at 1352.



    6     The Patents-in-Suit belong to the same patent
family. The ’390 patent is a continuation of the applica-
tion that led to the ’816 patent, which in turn is a contin-
uation of the application that led to the ’003 patent, and
the ’003 patent is a continuation-in-part of the application
that led to the ’617 patent.
     7    SSI contests the District Court’s decision to treat
claim 14 of the ’003 patent and claim 13 of the ’617 patent
as representative, alleging that we instead should look to
claim 1 in each patent and certain dependent claims.
Appellant’s Br. 34–36. However, SSI does not identify a
meaningful difference between the claims analyzed by the
District Court, which are method claims, and claim 1 in
the patents, which are system claims, and the contested
dependent claims. See id. Indeed, the District Court
observed that “all of the concepts described” in claim 1 of
the patents “are included (indeed in fuller detail) in the”
claims it treated as representative, SSI, 2015 WL
4184486, at *4, a conclusion supported by the patents’
text, compare ’003 patent col. 14 l. 58–col. 15 l. 14 (claim
1), and ’617 patent col. 11 ll. 7–29 (claim 1), with ’003
patent col. 15 l. 50–col. 16 l. 6 (claim 14), and ’617 patent
col. 11 l. 62–col. 12 l. 18 (claim 13). “Because the [rele-
vant] system claim[s] and method claim[s]” in the ’003
and ’617 patents “contain only minor differences in termi-
nology but require performance of the same basic pro-
cess, . . . they should rise or fall together.” Accenture
Glob. Servs., GmbH v. Guidewire Software, Inc., 728 F.3d
1336, 1344 (Fed. Cir. 2013) (internal quotation marks,
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.       7



   Claim 14 of the ’003 patent recites:
   A method for validating entry into a first transit
   system using a bankcard terminal, the method
   comprising:
       downloading, from a processing system
       associated with a set of transit systems in-
       cluding the first transit system, a set of
       bankcard records comprising, for each
       bankcard record in the set, an identifier of
       a bankcard previously registered with the
       processing system, and wherein the set of
       bankcard records identifies bankcards
       from a plurality of issuers;
       receiving, from a bankcard reader,
       bankcard data comprising data from a
       bankcard currently presented by a holder
       of the bankcard, wherein the bankcard
       comprises one of a credit card and a debit
       card;




brackets, and citation omitted). In any event, our analy-
sis covers claim 1 of each patent and the disputed de-
pendent claims for purposes of completeness. SSI does
not challenge the District Court’s decision to treat claim 1
of each of the ’816 and ’390 patents as representative.
    SSI also contests the District Court’s purported fail-
ure to independently consider the eligibility of claims 18
and 19 in the ’390 patent, which require a “token reader.”
Appellant’s Br. 36 (discussing ’390 patent col. 25 ll. 46–54
(claims 18–19)). SSI, however, equates the recited “token
reader” to a “bankcard reader,” id., which the District
Court considered in its analysis, see SSI, 2015 WL
4184486, at *4, *6.
8           SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



        determining an identifier based on at least
        part of the bankcard data from the cur-
        rently presented bankcard;
        determining whether the currently pre-
        sented bankcard is contained in the set of
        bankcard records;
        verifying     the   currently     presented
        bankcard with a bankcard verification
        system, if the bankcard was not contained
        in the set of bankcard records; and
        denying access, if the act of verifying the
        currently presented bankcard with the
        bankcard verification system results in a
        determination of an invalid bankcard.
’003 patent col. 15 l. 50–col. 16 l. 6.
    Claim 13 of the ’617 patent recites:
    A method for validating entry into a first transit
    system using a bankcard terminal, the method
    comprising:
        downloading, from a processing system
        associated with a set of transit systems in-
        cluding the first transit system, a list of
        bankcards comprising, for each bankcard
        in the list, a hash identifier of a bankcard
        previously presented, by a respective
        holder of the bankcard, to the processing
        system, wherein the bankcard comprises
        one of a credit card and a debit card;
        receiving, from a bankcard reader,
        bankcard data comprising data from a
        bankcard currently presented by a holder
        of the bankcard;
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.        9



        generating a hash identifier based on the
        bankcard data from the currently present-
        ed bankcard, wherein the hash identifier
        comprises a hash of at least part of the
        bankcard data;
        determining whether the currently pre-
        sented bankcard is contained in the list of
        bankcards;
        verifying      the   currently  presented
        bankcard with a bankcard verification
        system, if the bankcard was not contained
        in the list of bankcards; and
        denying access, if the act of verifying the
        currently presented bankcard with the
        bankcard verification system results in a
        determination of an invalid bankcard.
’617 patent col. 11 l. 62–col. 12 l. 18.
    Claim 1 of the ’816 patent recites:
    A method of funding transit rides associated with
    at least one public transit network, from a plurali-
    ty of funding sources, the method comprising:
        configuring a processor, associated with
        the at least one public transit network,
        wherein configuring the processor com-
        prises:
            storing, in memory, a plurality of
            balance classes;
            storing, in the memory, at least
            one rule for a prioritization of the
            balance classes;
            storing, in the memory, at least
            one fare rule; and
10          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



             maintaining, in the memory, a
             transit account and a respective
             plurality of balances; and
         processing a bankcard presentation rec-
         ord, wherein the bankcard presentation
         record comprises an identifier to the
         transit account, and wherein processing
         the bankcard presentation record com-
         prises:
             receiving the bankcard presenta-
             tion record at the processor;
             searching the memory for the
             transit account identified by the
             identifier in the bankcard presen-
             tation record;
             inferring, from at least one of the
             at least one fare rules, a resultant
             fare;
             selecting a balance from the plu-
             rality of balances for the transit
             account by using at least one of
             the at least one rule for the priori-
             tization of the balance classes; and
             accounting for a fare by applying
             the fare to the selected balance.
’816 patent col. 25 ll. 11–38.
     Finally, claim 1 of the ’390 patent recites:
     A method of using a bank card as an identifying
     token for time-based mass transit fare products,
     without using writeable memory on the bank
     card, the method comprising:
         processing a timepass record associated
         with at least one public transit network,
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.   11



       wherein the timepass record comprises an
       indication of duration and an identifier to
       a first transit account, and wherein pro-
       cessing the timepass record comprises:
           receiving the timepass record rep-
           resenting an advance purchase of
           a fare product; and
           indicating the first transit account
           identified by the timepass record
           is enabled for a timepass product;
       processing a first presentation record,
       wherein the first presentation record com-
       prises a timestamp and an identifier to
       the first transit account, and wherein pro-
       cessing of the first presentation record
       comprises:
           receiving the first presentation
           record;
           determining that the first transit
           account identified by the identifier
           in the first presentation record is
           enabled for a timepass product;
           and
           providing a discount associated
           with the timepass product; and
       processing a second presentation record,
       wherein the second presentation record
       comprises a timestamp and an identifier
       to a second transit account, and wherein
       processing of the second presentation rec-
       ord comprises:
           receiving the second presentation
           record; and
12          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



             determining that the second trans-
             it account identified by the identi-
             fier in the second presentation
             record is not enabled for a
             timepass product; and applying a
             non-timepass fare rule.
’390 patent col. 24 l. 41–col. 25 l. 5.
B. The Asserted Claims Are Directed to an Abstract Idea
    Under Alice step one, “claims are considered in their
entirety to ascertain whether their character as a whole is
directed to excluded subject matter.” Internet Patents
Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed.
Cir. 2015); see McRO, Inc. v. Bandai Namco Games Am.
Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016) (stating that for
method claims “a court must look to the claims as an
ordered combination, without ignoring the requirements
of the individual steps”). “We . . . look to whether the
claims . . . focus on a specific means or method that im-
proves the relevant technology or are instead directed to a
result or effect that itself is the abstract idea and merely
invoke generic processes and machinery.” McRO, 837
F.3d at 1313.
    The District Court held that, “[s]tripped of the tech-
nical jargon that broadly describes non-inventive ele-
ments (e.g., the ‘interfaces’ and ‘processing systems’), and
further shorn of the typically obtuse syntax of patents, the
patents here really only cover an abstract concept: paying
for a subway or bus ride with a credit card.” SSI, 2015
WL 4184486, at *4. 8 The District Court further found


     8  SSI avers that the District Court impermissibly
“chopp[ed] the [Asserted Claims] down to an unrecogniza-
ble gist” by categorizing them as directed to financial
transactions. Appellant’s Br. 47; see id. at 47−48. This
court has warned against abstracting the claims at too
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.          13



that, although the Patents-in-Suit disclose inventions
that would allow riders to more quickly and efficiently
access a mass transit network, “the recent case law has
reiterated that whatever bells and whistles may be added,
when reduced to their core, claims directed to the perfor-
mance of certain financial transactions—and paying a
fare is a financial transaction—must be categorized as
involving abstract ideas.” Id. (internal quotation marks
and citations omitted).
    On appeal, SSI argues that, because the ’003 and ’617
patents disclose inventions that “operate in the tangible
world” and satisfy a public demand for more convenient
travel that did not exist in the prior art, the patents’
claims are not directed to an abstract idea. Appellant’s
Br. 38; see id. at 38–40. Moreover, SSI alleges that the
’390 and ’816 patents similarly do not concern an abstract
idea because their claims “overcome challenges created by
the storage limitations that exist with conventional
tangible bankcards.” Id. at 42; see id. at 40−42.
     SSI’s arguments are unavailing. The Asserted Claims
of the ’003 and ’617 patents involve acquiring identifica-
tion data from a bankcard, using the data to verify the
validity of the bankcard, and denying access to a transit
system if the bankcard is invalid. See ’003 patent col. 14
l. 58–col. 15 l. 14 (claim 1), col. 15 l. 50–col. 16 l. 6 (claim


high a level. See Enfish, LLC v. Microsoft Corp., 822 F.3d
1327, 1337 (Fed. Cir. 2016) (“[D]escribing the claims at
such a high level of abstraction and untethered from the
language of the claims all but ensures that the exceptions
to § 101 swallow the rule.”). The District Court here, as
we have instructed, looked to the language of the claims
to discern the character of the patent. See SSI, 2015 WL
4184486, at *1−2. Even if it had oversimplified the
claims, though, we find the legal conclusion reached
correct under our de novo standard of review.
14         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



14); ’617 patent col. 11 ll. 7–29 (claim 1), col. 11 l. 62–
col. 12 l. 18 (claim 13). The Asserted Claims of the ’816
patent involve acquiring identification data from a
bankcard and funding a transit ride from one of multiple
balances associated with that bankcard. See ’816 patent
col. 25 ll. 11–38 (claim 1). Moreover, the Asserted Claims
of the ’390 patent involve identifying whether a presented
bankcard is associated with a timepass (e.g., a monthly
subway card) and, if the timepass is found, charging a
different fare. See ’390 patent col. 24 l. 41–col. 25 l. 5
(claim 1). Taken together, the Asserted Claims are di-
rected to the formation of financial transactions in a
particular field (i.e., mass transit) and data collection
related to such transactions. The Asserted Claims are not
directed to a new type of bankcard, turnstile, or database,
nor do the claims provide a method for processing data
that improves existing technological processes. Rather,
the claims are directed to the collection, storage, and
recognition of data. We have determined that claims
directed to the collection, storage, and recognition of data
are not directed to an abstract idea. See Elec. Power, 830
F.3d at 1353 (stating that we “have treated collecting
information . . . as within the realm of abstract ideas”);
Content Extraction, 776 F.3d at 1347 (surveying previous
opinions that found “claims directed to the mere for-
mation and manipulation of economic relations” through
“financial transactions” abstract); accord Intellectual
Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332,
1340 (Fed. Cir. 2017) (discussing abstract idea precedent
related to organizing, displaying, and manipulating data).
Accordingly, the Asserted Claims are directed to an
abstract idea under Alice step one.
    SSI’s argument that the Asserted Claims are patent
eligible because they improve prior systems of fare collec-
tion by speeding up the process at the turnstile is unavail-
ing. We have found “that claims purporting to improve
the functioning of the computer itself, or improving an
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.       15



existing technological process[,] might not succumb to the
abstract idea exception.” Enfish, 822 F.3d at 1335 (inter-
nal quotation marks, brackets, and citation omitted). The
question in such cases is “whether the focus of the claims
is on the specific asserted improvement in computer
capabilities” or whether “computers are invoked merely as
a tool.” Id. at 1335–36. For example, in DDR Holdings,
LLC v. Hotels.com, L.P., we held that claims “necessarily
rooted in computer technology in order to overcome a
problem specifically arising in the realm of computer
networks” did not merely recite an abstract idea. 773
F.3d 1245, 1257 (Fed. Cir. 2014). More recently, we held
in Enfish that claims “directed to a specific improvement
to the way computers operate, embodied in [a] self-
referential table,” did not fall within the realm of abstract
ideas. 822 F.3d at 1336. SSI, however, does not argue
that its claims are directed to an improvement in comput-
er technology. Consequently, our decisions in Enfish and
DDR Holdings are inapposite.
    Similarly, in McRO, we held that a “claimed process
us[ing] a combined order of specific rules” improved upon
existing technological processes, such that it did not recite
an abstract idea. 837 F.3d at 1315−16. Here, the Asserted
Claims are not directed to specific rules that improve a
technological process. Again, the claims recite the collec-
tion of financial data from third parties, the storing of
that financial data, linking proffered credit cards to the
financial data, and allowing access to a transit system
based on the financial data. The claims are not directed
to a combined order of specific rules that improve any
technological process, but rather invoke computers in the
collection and arrangement of data. Claims with such
character do not escape the abstract idea exception under
Alice step one. See RecogniCorp, 855 F.3d at 1327.
    SSI repeatedly emphasizes that we nevertheless
should not find the Asserted Claims directed to an ab-
stract idea because they apply to a particular, concrete
16         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



field—namely, mass transit. See Appellant’s Br. 38
(“Anyone who has ever passed through a terminal or
entry gate for their local subway—or who has slammed a
hip into a locked turnstile—knows that such terminals
are the antithesis of ‘abstract.’”); see id. at 43–44. But, as
we have said before, “merely limiting the field of use of
the abstract idea to a particular . . . environment does not
render the claims any less abstract.” Affinity Labs of Tex.,
LLC v. DIRECTV, LLC, 838 F.3d 1253, 1259 (Fed. Cir.
2016); Capital One Fin., 850 F.3d at 1340 (same). Indeed,
that the steps recited in the Asserted Claims are “neces-
sarily” performed “in the physical, rather than purely
conceptual, realm . . . is beside the point.” Alice, 134 S.
Ct. at 2358 (internal quotation marks and citation omit-
ted).
    SSI also contends that the District Court failed to ap-
preciate that, because the Patents-in-Suit disclose inven-
tions claiming “speedier solutions,” the Asserted Claims
do not fall within the abstract ideas realm. Appellant’s
Br. 51. SSI’s argument is misplaced here because we
consider the application of an abstract idea under Alice
step two, not Alice step one. See, e.g., Intellectual Ven-
tures I LLC v. Symantec Corp., 838 F.3d 1307, 1315 (Fed.
Cir. 2016). SSI’s reliance on decisions from this court
concerning obviousness, see Appellant’s Br. 51–52, does
not change our conclusion on this point, cf. Synopsys, Inc.
v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir.
2016) (explaining that, although some overlap occurs, the
analysis under § 101 differs from that under the other
patent-validity statutes).
    With respect to the ’003 and ’617 patents, the dissent
states that those patents are directed not to any financial
transaction, but to “the identification of a bank card as
authorized for use in accessing a transit system.” Dissent
at 10. That characterization ignores what is actually
recited in the asserted claims of the ’003 and ’617 patents.
See, e.g., ’003 patent col. 14 l. 66–col. 15 l. 2 (describing
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.        17



use of a bankcard, a product generally used to conduct
financial transactions, that provides “data” to a “bankcard
reader”); ’617 patent col. 11 ll. 14–17 (similar). Our
mandate from the Supreme Court under Alice step one is
to ascertain what the claims are “directed to,” not the
“thrust,” “heart,” or “focus” of the invention, as the dissent
argues. Dissent at 7, 9, 11, 12. Here, regardless of
whether the claims teach a financial transaction, when
properly considered, it is evident that the claims are
directed to the collection, analysis, and classification of
information, and not access alone. See Dissent at 11
(stating ipse dixit that “[t]he claims call for much more in
making practical use of data from a conventional bank
card to gain access to a transit system”); see id. at 12–14
(discussing collection of data through the combination of
various components of the claimed invention).
    The dissent also conflates its Alice step one analysis
with Alice step two’s inventive concept analysis, ignoring
the Supreme Court directive that the Alice test is a two-
step inquiry. Dissent at 13−14.
   C. The Asserted Claims Do Not Recite an Inventive
                       Concept
     The second step of the § 101 analysis requires us to
determine whether the claim elements, when viewed
individually and as an ordered combination, contain “an
inventive concept sufficient to transform the claimed
abstract idea into a patent-eligible application.” Alice,
134 S. Ct. at 2357. A claim contains an inventive concept
if it “include[s] additional features” that are more than
“well-understood, routine, conventional activities.” Id. at
2357, 2359 (internal quotation marks, brackets, and
citations omitted).
    The District Court held that the Asserted Claims lack
an inventive concept because they recite general computer
and technological components “like ‘processor,’ ‘hash
identifier,’ ‘identifying token,’ and ‘writeable memory,’ the
18         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



technical details of which are not described.” SSI, 2015
WL 4184486, at *6. As a result, the District Court held
that “[i]nvoking various computer hardware elements,
which save time by carrying out a validation function on
site rather than remotely, does not change the fact that in
substance, the claims are still directed to nothing more
than running a bankcard sale—that is, the performance of
an abstract business practice.” Id. at *5 (internal quota-
tion marks and citation omitted). We agree.
    SSI argues that the District Court erred in its analy-
sis under Alice step two. SSI alleges that the Asserted
Claims “solv[e] technological problems in conventional
industry practice,” such that they disclose an inventive
concept. Appellant’s Br. 53 (capitalization modified); see
id. at 53–56. It further avers that the Asserted Claims
“reflect an unconventional way to make an electronic
process better,” id. at 59, and that the Asserted Claims
“address specific technology challenges that arose unique-
ly in the transit sector,” id. at 61. In support of its posi-
tion, SSI cites Diamond v. Diehr, 450 U.S. 175 (1981), and
DDR Holdings, 773 F.3d 1245. See id. at 53–54.
     The Asserted Claims fail to provide an inventive con-
cept. The ’003 patent teaches the use of a “processor,” an
“interface,” “memory,” and “data,” including “hash identi-
fier[s].” 9 ’003 patent col. 14 l. 58–col. 15 l. 14 (claim 1),


     9  A “hash identifier” consists of data extracted from
a bankcard to create a “digital fingerprint” of the card
that a bankcard terminal processor uses to identify the
card in question. ’003 patent col. 11 ll. 51–58, col. 12 ll.
21–23. SSI contends that certain dependent claims in the
’003 and ’390 patents instruct the use of hashing, such
that those dependent claims are “more concrete and
narrow[er] than” the independent claims in those patents.
Appellant’s Br. 35–36. The operative test here does not
require concreteness and narrowness, see Alice, 134 S. Ct.
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.          19



col. 16 ll. 13–18 (claim 16); see id. col. 15 l. 50–col. 16 l. 6
(claim 14) (discussing the use of, inter alia, “a processing
system” and “data”). So too does the ’617 patent. ’617
patent col. 11 ll. 7–29 (claim 1); see id. col. 11 l. 62–col. 12
l. 18 (claim 13) (discussing the use of, inter alia, “a pro-
cessing system,” “a hash identifier,” and “data”). The ’816
and ’390 patents similarly recite the use of a “processor”
and “memory.” ’816 patent col. 25 ll. 12–38 (claim 1); ’390
patent col. 24 l. 42–col. 25 l. 5 (claim 1), col. 26 ll. 29–63
(claim 31). When claims like the Asserted Claims are
“directed to an abstract idea” and “merely requir[e] gener-
ic computer implementation,” they “do[] not move into
section 101 eligibility territory.” buySAFE, Inc. v. Google,
Inc., 765 F.3d 1350, 1354 (Fed. Cir. 2014) (internal quota-
tion marks and citation omitted); see Capital One Fin.,
850 F.3d at 1341 (describing a “processor” as a generic
computer component); Mortg. Grader, Inc. v. First Choice
Loan Servs. Inc., 811 F.3d 1314, 1324–25 (Fed. Cir. 2016)
(discussing the same with respect to an “interface”);
Content Extraction, 776 F.3d at 1347–48 (discussing the
same with respect to “data” and “memory”).
    Neither Diehr nor DDR Holdings demonstrate that
the Asserted Claims contain an inventive concept. In
Diehr, the Supreme Court held that a computer-
implemented process for curing rubber was patent eligible
because, even though it employed a well-known mathe-
matical equation, it used the equation in a process to
solve a technological problem in conventional industry
practice. See 450 U.S. at 185–93. Diehr does not apply
when, as here, the claims at issue use generic computer
components “in which to carry out the abstract idea.”



at 2355, rather, the claims must have an inventive con-
cept. A hash identifier is a generic and routine concept
that does not transform the claims to a patent eligible
application of the abstract idea.
20         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



LendingTree, LLC v. Zillow, Inc., 656 F. App’x 991, 997
(Fed. Cir. 2016) (footnote omitted). In DDR Holdings, we
found claims patent eligible under § 101 because, inter
alia, they had no pre-Internet analog. See 773 F.3d at
1257–59. DDR Holdings does not apply when, as here,
the asserted claims do not “attempt to solve a challenge
particular to the Internet.” In re TLI Commc’ns LLC
Patent Litig., 823 F.3d 607, 613 (Fed. Cir. 2016) (internal
quotation marks and citation omitted). We agree with the
District Court that the Asserted Claims recite the ab-
stract idea of collecting financial data using generic
computer components. The Asserted Claims therefore
offer no inventive concept that transforms them into
patent-eligible subject matter.
 D. SSI’s Other Arguments Do Not Demonstrate Patent
                     Eligibility
    SSI contends that “other indicia” prove that the As-
serted Claims cover patent-eligible subject matter. Appel-
lant’s Br. 62 (capitalization omitted). First, SSI argues
that the Asserted Claims “do not preempt any field or
allegedly abstract idea.” Id. (capitalization modified).
However, when a patent’s claims “disclose patent[-
]ineligible subject matter[,] . . . preemption concerns are
fully addressed and made moot.” Ariosa Diagnostics, Inc.
v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015).
Second, SSI contends that the Asserted Claims “satisfy
the machine-or[-]transformation test.” Appellant’s Br. 64.
The machine-or-transformation test “can provide a useful
clue in the second step of the Alice framework,” but it “is
not the sole test governing § 101 analyses.” Ultramercial,
Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014)
(internal quotation marks and citation omitted). Under
that test, “[a] claimed process can be patent[]eligible
under § 101 if,” inter alia, “it is tied to a particular ma-
chine or apparatus.” Id. (internal quotation marks and
citations omitted). In other words, the subject patent
must disclose the use of an apparatus specific to the
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.          21



claimed invention. See id. The Asserted Claims, by
contrast, disclose the use of generic computer components
and machinery. See ’003 patent col. 14 l. 58–col. 15 l. 14
(claim 1), col. 16 ll. 13–18 (claim 16); ’617 patent col. 11 ll.
7–29 (claim 1); ’816 patent col. 25 ll. 12–38 (claim 1); ’390
patent col. 24 l. 41–col. 25 l. 5 (claim 1), col. 26 ll. 29–63
(claim 31). That is not enough to find that the Asserted
Claims contain an inventive concept. See Ultramercial,
772 F.3d at 716 (holding that a claim does not pass the
machine-or-transformation test if it is “not tied to any
particular novel machine or apparatus, only a general
purpose computer”).
                         CONCLUSION
     We have considered SSI’s remaining arguments and
find them unpersuasive. Accordingly, the Final Judgment
of the U.S. District Court for the Northern District of
Illinois is
                        AFFIRMED
  United States Court of Appeals
      for the Federal Circuit
                 ______________________

      SMART SYSTEMS INNOVATIONS, LLC,
               Plaintiff-Appellant

                            v.

    CHICAGO TRANSIT AUTHORITY, CUBIC
   CORPORATION, CUBIC TRANSPORTATION
   SYSTEMS, INC., CUBIC TRANSPORTATION
         SYSTEMS CHICAGO, INC.,
              Defendants-Appellees
             ______________________

                       2016-1233
                 ______________________

   Appeal from the United States District Court for the
Northern District of Illinois in No. 1:14-cv-08053, Judge
Edmond E. Chang.
                ______________________


LINN, Circuit Judge, dissenting in part and concurring in
part.
    The court once again concludes that the judicially
crafted “abstract idea” exception to patent eligibility now
renders invalid the asserted claims of four U.S. patents
covering apparatus and methods created by human
activity to overcome heretofore perceived limitations in
the use of ordinary bankcards to access transit systems.
The majority commits the same error as the district court
in engaging in a reductionist exercise of ignoring the
2          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



limitations of the claims in question and, at least with
respect to the ’003 and ’617 patents, in failing to appreci-
ate that the abstract idea exception—if it is to be applied
at all—must be applied narrowly, consistent with its
genesis. Because the representative claims of the ’003
and ’617 patents are not directed to abstract ideas under
any reasonable application of the Alice/Mayo test, I
respectfully dissent. Because the majority’s determina-
tion with respect to the representative claims of the ’816
and ’390 patents is consistent with past decisions finding
ineligibility, I concur with that part of its decision, not
because the inventions covered by the claims do not
deserve patent protection but because I am bound by
precedent to reach that conclusion.
                  I. PATENT ELIGIBILITY
    The language of Section 101 is well-recognized as
providing a wide and permissive scope for patent eligibil-
ity. Bilski v. Kappos, 561 U.S. 593, 601 (2010) (quoting
Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)) (“In
choosing such expansive terms . . . modified by the com-
prehensive ‘any,’ Congress plainly contemplated that the
patent laws would be given wide scope.”). Within this
expansive provision, the Supreme Court has recognized
“an important implicit exception: Laws of nature, natural
phenomena, and abstract ideas are not patentable.” Alice
Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014)
(quoting Mayo Collaborative Servs. v. Prometheus Labs.,
Inc., 132 S. Ct. 1289, 1293 (2012)); Assoc. for Molecular
Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116
(2013); Bilski, 561 U.S. at 601–02; Diamond v. Diehr, 450
U.S. 175, 185 (1981); Parker v. Flook, 437 U.S. 584, 589
(1978); Gottschalk v. Benson, 409 U.S. 63, 67 (1972); Le
Roy v. Tatham, 55 U.S. 156, 174–75 (1853).
    These three “exceptions” share a common origin and
address what the Supreme Court saw and has often
reiterated as a related set of common concerns. “A princi-
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.      3



ple, in the abstract, is a fundamental truth; an original
cause; a motive; these cannot be patented, as no one can
claim in either of them an exclusive right.” Le Roy, 55
U.S. at 175; see also, Diehr, 450 U.S. at 185; Diamond v.
Chakrabarty, 447 U.S. at 309; Bilski, 561 U.S. at 601–02;
Mayo, 132 S. Ct. at 1293; Alice, 134 S. Ct. at 2354. “[A]n
idea of itself is not patentable.” Rubber-Tip Pencil Co. v.
Howard, 87 U.S. 498, 507 (1874). “[A] scientific truth, or
the mathematical expression of it, is not [a] patentable
invention.” Mackay Co. v. Radio Corp., 306 U.S. 86, 94
(1939). “He who discovers a hitherto unknown phenome-
non of nature has no claim to a monopoly of it which the
law recognizes.” Funk Bros. Seed Co. v. Kalo Inoculant
Co., 333 U.S. 127, 130 (1948).
    These cases make clear that a fundamental truth, an
original cause, a motive, an idea of itself, a scientific
truth, or the mathematical expression of it, or a phenom-
enon of nature, are not patent eligible. The underlying
concerns common to these eligibility exceptions is that the
patenting of these sorts of basic tools of scientific and
technological activity risks foreclosing innovation and
inhibiting human ingenuity. “Phenomena of nature,
though just discovered, mental processes, and abstract
intellectual concepts are not patentable, as they are the
basic tools of scientific and technological work.” Benson,
409 U.S. at 67; Alice, 134 S. Ct. at 2354 (same). The
Supreme Court has “repeatedly emphasized this . . .
concern that patent law not inhibit further discovery by
improperly tying up the future use of’ these building
blocks of human ingenuity.” Alice, 134 S. Ct. at 2354
(quoting Mayo, 132 S. Ct. at 1301). The “monopolization
of those tools through the grant of a patent might tend to
impede innovation more than it would tend to promote it.”
Mayo, 132 S. Ct. at 1293. The Supreme Court tags this
underlying concern “pre-emption.” Alice, 134 S. Ct. at
2354.
4          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



     It can be appreciated from this history that there is no
principled difference between the judicially recognized
exception relating to “abstract ideas” and those relating to
laws of nature and natural phenomena. All three non-
statutory exceptions are intended to foreclose only those
claims that preempt and thereby preclude or inhibit
human ingenuity with regard to basic building blocks of
scientific or technological activity. They are intended to
be read narrowly. Alice, 134 S. Ct. at 2354 (quoting Mayo,
132 S. Ct. at 1293) (“[W]e tread carefully in construing
this exclusionary principle lest it swallow all of patent
law. At some level, ‘all inventions . . . embody, use, re-
flect, rest upon, or apply laws of nature, natural phenom-
ena, or abstract ideas.’”).
     The narrow character of the law of nature and natural
phenomenon exceptions is relatively self-evident, but the
contours of the abstract idea exception are not easily
defined. For that reason, the abstract idea exception is
almost impossible to apply consistently and coherently.
To determine whether a claim is patent ineligible as
merely an abstract idea, the Supreme Court instructed
that the inquiry may be broken into two parts or steps:
first, determine if the claim is “directed to an abstract
idea,” and second, consider whether the claim contains
something more in terms of an “inventive concept.” Alice,
134 S. Ct. at 2355; Mayo, 132 S. Ct. at 1296–97. The
problem with this test, however, is that it is indetermi-
nate and often leads to arbitrary results. Moreover, if
applied in a legal vacuum divorced from its genesis and
treated differently from the other two exceptions, it can
strike down claims covering meritorious inventions not
because they attempt to appropriate a basic building
block of scientific or technological work, but simply be-
cause they seemingly fail the Supreme Court’s test.
    In applying the Supreme Court’s test, we are in-
structed to examine the claims’ “character as a whole,”
Internet Patents Corp. v. Active Network, Inc., 790 F.3d
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.      5



1343, 1346 (Fed. Cir. 2015), and look to “capture[] the
‘basic thrust’ of the Asserted Claims,” Synopsys, Inc. v.
Mentor Graphics Corp., 839 F.3d 1138, 1150 (Fed. Cir.
2016) (quoting BASCOM Global Internet Servs., Inc. v.
AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir.
2016)), or the “prominent idea in the mind of the inven-
tor,” Rubber-Tip Pencil, 87 U.S. at 506. This often results
in the re-characterization of claims to “a high level of
abstraction.” Enfish, LLC v. Microsoft Corp., 822 F.3d
1327, 1337 (Fed. Cir. 2016). Re-characterizing claims in a
way that is “untethered from the language of the claims
all but ensures that the exceptions to § 101 swallow the
rule.” Id. But if we are not to re-characterize the claims,
what are we supposed to do? Are we not to ignore any
limitations? May we ignore some? If so, which ones?
Which limitations matter and which do not? What exact-
ly is the task at hand under step one?
     Step one cannot be a hunt for the abstract idea under-
lying the claim, because underlying virtually every claim
is an abstract idea. And if the task under step one is to
assess whether the claim is directed to no more than an
abstract idea, what is left for determination under step
two? Where do you draw the line between properly de-
termining what the claim is directed to and improperly
engaging in an overly reductionist exercise to find the
abstract idea that underlies virtually every claim? See
Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d
1042, 1050 (Fed. Cir. 2016) (“At step one, therefore, it is
not enough to merely identify a patent-ineligible concept
underlying the claim; we must determine whether that
patent-ineligible concept is what the claim is ‘directed
to.’”). Despite the number of cases that have faced these
questions and attempted to provide practical guidance,
great uncertainty yet remains. And the danger of getting
the answers to these questions wrong is greatest for some
of today’s most important inventions in computing, medi-
6          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



cal diagnostics, artificial intelligence, the Internet of
Things, and robotics, among other things.
    A few things should be apparent. First, it is always
important to look at the actual language of the claims. By
statute, such language “particularly point[s] out and
distinctly claim[s] the subject matter which the inventor []
regards as the invention.” 35 U.S.C. § 112; See Alice, 134
S. Ct. at 2355 (“[F]irst determine whether the claims at
issue are directed to a patent-ineligible concept.” (empha-
sis added)); 35 U.S.C. § 100(j) (“The term ‘claimed inven-
tion’ means the subject matter defined by a claim in a
patent or an application for a patent.”). I do not mean to
imply that a formal claim construction is required in
every Section 101 case. What a claim is directed to is
often apparent without an in-depth analysis. See, e.g.,
Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 719 (Fed.
Cir. 2014) (“No formal claim construction was required
because the asserted claims disclosed no more than an
abstract idea garnished with accessories and there was no
reasonable construction that would bring [them] within
patentable subject matter” (internal quotations omitted,
alteration in original)). But individual claim limitations
cannot be ignored. By virtue of their inclusion in the
claims, every limitation warrants some consideration as
to the role it plays in reciting the invention.
     Second, in considering the roles played by individual
limitations, it is important to read the claims “in light of
the specification.” Enfish, 822 F.3d at 1335; In re TLI
Commc’ns LLC Patent Litig. 823 F.3d 607, 611–13 (Fed.
Cir. 2016); AmDocs (Israel) Ltd. v. Openet Telecom, Inc.,
841 F.3d 1288, 1299 (Fed. Cir. 2016). The specification is,
“[i]n most cases, the best source for discerning the proper
context of claim terms.” Metabolite Labs., Inc. v. Lab.
Corp. of Am. Holdings, 370 F.3d 1354, 1360 (Fed. Cir.
2004), cert. granted, 546 U.S. 975 (2005), cert. dismissed,
548 U.S. 124 (per curiam). A determination of what the
claims are directed to is often aided by a consideration of
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.        7



the specification and its description of the problem to be
solved and the discovered solution to that problem. The
specification is a useful aid in the court’s determination of
the thrust of the invention or what the inventors “charac-
terize [as] their contribution to the art.” In re Diehr, 602
F.2d 982, 983 (C.C.P.A. 1979) (Rich, J.), aff’d, 450 U.S.
175.
    Ultimately, the fundamental question in “abstract
idea” cases is whether the claim is directed to such a basic
building block of scientific or technological activity as to
foreclose or inhibit future innovation or whether the claim
instead is directed to a tangible application that serves a
“new and useful end.” Benson, 409 U.S. at 67; see also
Diehr, 450 U.S. at 188 (“While a scientific truth, or the
mathematical expression of it, is not a patentable inven-
tion, a novel and useful structure created with the aid of
knowledge of scientific truth may be.” (quoting Mackay
Radio, 306 U.S. at 94)). Claims directed not merely to
basic building blocks of scientific or technological activity
but instead to innovative solutions to real problems that
result from human activity and are not capable of perfor-
mance solely in the human mind should be fully eligible
for patent protection and not lightly discarded.
         II. THE TECHNOLOGY AND BACKGROUND
    In conventional transit systems, access is rapidly pro-
vided through a turnstile by directly depositing the re-
quired fare using cash, tokens or some form of proprietary
fare card. Such systems generally do not use conventional
bankcards. Conventional bankcard transactions use a
card reader in contact with the card’s magnetic strip or
imbedded chip to read the card number and other data at
a merchant’s location. The read data is then transmitted
over a telephone line or network to a merchant bank for
verification of card validity and fund availability. The
merchant bank processes the received data and returns to
the merchant an approval or disapproval message. ’003
8          SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



patent, col.1, ll.23–36. This takes a certain amount of
time and requires some form of connectivity between the
merchant and the merchant bank.
    According to Smart Systems, the latency in such con-
ventional bankcard transactions and the lack of network
connectivity in some transit control points render conven-
tional bankcards impractical for point-of-access use in a
transit system that requires rapid fare processing. The
four patents in suit relate to methods and systems that
overcome these latency and connectivity problems and
enable the use of conventional bankcards to gain access to
a transit system. Id. at col.1, l.52–col.3, l.14.
    The district court treated all of the patents as if they
were essentially the same despite the differences that are
apparent from the language of the claims. The district
court deliberately ignored those limitations and concluded
that, “[s]tripped of the technical jargon that broadly
describes non-inventive [limitations] (e.g. the ‘interfaces’
and ‘processing systems’), and further shorn of the typi-
cally obtuse syntax of patents, the patents here really
only cover an abstract concept: paying for a subway or bus
ride with a credit card.” Smart Sys. Innovations, LLC v.
Chicago Trans. Authority, No. 14-C-08053, 2015 WL
4184486, at *4 (N.D. Ill. July 10, 2015) (“District Court
Opinion”). See Alice, 134 S. Ct. 2347; Mayo, 132 S. Ct.
1289. The district court erred in ignoring what the claims
actually recited. The majority here commits the same
error.
               III. THE PATENTS ON APPEAL
    The four patents asserted by Smart Systems in this
appeal can be divided into two groups. The first group
includes the ’003 patent and the ’617 patent, which, as
Smart Systems categorizes them, “claim systems and
methods for using a bank card directly at a physical gate
or terminal to enter a mass transit system.” Appellant’s
Opening Br. at 19. These patents disclose the use of a
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.         9



bankcard reader to scan a credit or bankcard and a pro-
cessor to compare the scanned data against a locally-
stored “white list” of approved transit accounts. If the
card owner is listed as an account-holder, access is grant-
ed without immediately having to establish network
connectivity to process and charge the account, which can
be done at a later time. If the card owner is not listed as
an account-holder, access is denied. The second group
includes the ’390 patent and the ’816 patent. These
patents claim features relating to the use of conventional
bankcards to implement time-based fare rules despite the
inability of bankcards to accept and store data.
               A. The ’003 and ’617 Patents
     The majority makes the same error as the district
court in treating all of the representative claims together
and in concluding that they are directed to “the formation
of financial transactions in a particular field (i.e., mass
transit) and data collection related to such transactions,”
Maj. Op. at 14, or to “the collection, analysis, and classifi-
cation of information,” id. at 17, and concluding that those
are abstract ideas.
    The majority’s abstractness determination turns
wholly on the level of generality with which it describes
the focus 1 of the claims and is at such a high level of



    1   The majority objects to the terms “focus,” “thrust”
and “heart” of the claims, as being inconsistent with the
mandate in Alice to identify what the claims are
“directed to.” Maj. Op. at 17. Our precedent, however,
has used those phrases interchangeably and faithfully to
the holding of Alice. Enfish, 822 F.3d at 1335–36 (“For
that reason, the first step in the Alice inquiry in this case
asks whether the focus of the claims is on the specific
asserted improvement in computer capabilities . . . or,
instead, on a process that qualifies as an ‘abstract idea’
10         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



abstraction as to overlook and misstate what the inven-
tors considered to be their invention. Categorizing the
particular mechanism of action of the inventions claimed
in the ’003 and ’617 patents as “the formation of financial
transactions in a particular field” or “the collection, anal-
ysis, and classification of information,” does not correctly
reflect that the ’003 and ’617 patents contain limitations
that together enable the identification of a bankcard as
authorized for use in accessing a transit system. This is
much like the identification of a coin or token as genuine
in a mechanical transit system toll device. The specific
limitations can be appreciated from the language of
representative claim 14 of the ’003 patent and claim 13 of
the ’617 patent.
    The majority’s characterization of the claims ignores
the limitations explicitly tying the recited method to a
transit system and directed to the method of “validating
entry into a first transit system,” “downloading . . . a set
of bankcard records comprising . . . an identifier of a
bankcard previously registered with the processing sys-
tem,” “determining an identifier based on at least part of
the bankcard data,” “determining whether the currently
presented bankcard is contained in the set of bankcard
records,” and “denying access [under certain conditions].”



for which computers are invoked merely as a tool.”);
Synopsys, 839 F.3d at 1150 (“[W]e believe our definition
more accurately captures the ‘basic thrust’ of the Asserted
Claims.” (quoting BASCOM, 827 F.3d at 1348)); Intellec-
tual Ventures I LLC v. Erie Indemnity Co., 850 F.3d 1315,
1328 (Fed. Cir. 2017) (“[W]e agree with the district court
that the heart of the claimed invention lies in creating
and using an index to search for and retrieve data.”). In
each of these cases, as here, the objective was to discern—
to the extent possible—what the claims at issue were
“directed to.”
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.      11



’003 patent, col.15, l.51–col.16, l.6. See also ’617 patent,
col.11, l.62–col.12, l.18 (claim 13 reciting similar limita-
tions).
     The focus of the claims, evident from these limita-
tions, is the use of a white list in combination with a
bankcard reader to regulate access to mass transit. This
combination overcame the latency and connectivity issues
that previously precluded the practical use of a bankcard
to regulate mass transit. As explained in the specifica-
tion, the bankcard in this invention “function[s] primarily
as [an] identifying token[] until the total charge is com-
puted on a back-end fare processor.” ’003 patent, col.6,
ll.34–35. The result of the interaction between the
bankcard, the white list, and the terminal is the off-line
regulation of access. Id. at col. 9, ll.11–21. This is not a
financial transaction. The processing and payment of
transit fares occurs later in time, after access is granted,
and is not the subject of any of the representative claims
of the ’003 and ’617 patents. Nor is this merely the collec-
tion, analysis, and classification of information. The
claims call for much more in making practical use of data
from a conventional bankcard to gain access to a transit
system. At bottom, both of the majority’s categorizations
fail to reflect the combination of limitations that embody
the inventors’ asserted advance over the prior art.
    The majority asserts that the dissent’s characteriza-
tion “ignores what is actually recited in the Asserted
Claims,” and that “the claims are directed to the collec-
tion, analysis, and classification of information, and not
access alone.” Maj. Op. at 17 (citing the “data” and
“bankcard reader” claim elements). The majority seems
to imply that a claim directed to “access alone” could be
patent eligible, but one directed to controlling access by
manipulating information would not be patent eligible.
That the claims call for some “data” manipulation and a
“bankcard reader” overlooks claim limitations making use
of that data manipulation to control access to a transit
12        SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



system. See Diehr, 450 U.S. at 187 (“[A] claim drawn to
subject matter otherwise statutory does not become
nonstatutory simply because it uses a mathematical
formula, computer program, or digital computer.”). The
data and data processing included in the claims as a
whole are what support and enable the control of mass
transit access in an allegedly novel way—Smart Systems
does not seek to claim the data itself or the data manipu-
lation itself.
    The recited transit system in these claims is not mere-
ly a generic environment or “field of use” to a particular
environment, which may be ignored. Maj. Op. at 16
(quoting Affinity Labs of Tex., LLC v. DIRECTV, LLC,
838 F.3d 1253, 1259 (Fed. Cir. 2016)); see Intellectual
Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1320
(Fed. Cir. 2016) (explaining that the “directed to” inquiry
should exclude components that define a “generic envi-
ronment in which to carry out [an] abstract idea” (internal
quotation marks omitted) (quoting TLI Communications,
823 F.3d at 611)); Enfish, 822 F.3d at 1337–38 (rejecting
district court’s characterization of the claims as having
“oversimplified the self-referential components of the
claims and downplayed the invention’s benefits”). The
particular challenge of facilitating use of conventional
bankcards to access mass transit is at the heart of the
invention, much like the challenge of curing rubber was at
the heart of the invention in Diehr.
    Nor do the claims here merely describe a function
without claiming or describing the means by which that
function is accomplished. See McRO, Inc. v. Bandai
Namco Games Am. Inc., 837 F.3d 1299, 1312 (Fed. Cir.
2016). The claims recite more than a function and instead
cover a specifically stated means to accomplish the func-
tion of transit system access by comparing bankcard data
to a locally stored white list of approved bankcards. The
claims do not preclude other means of access or other
forms of authorization or identification.
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.       13



    This also is not a case involving improvements in
component functionality. The role of the claimed compo-
nents here is unlike that in Alice and in Content Extrac-
tion. In Alice, the Court explained that the hardware
components in the claims at issue—“data processing
system,” “communications controller,” and “data storage
unit”—were “purely functional and generic” because
“[n]early every computer will include” those components.
Alice, 134 S. Ct. at 2360 (quoting CLS Bank Int’l v. Alice
Corp., 717 F.3d 1269, 1291 (Fed. Cir. 2013) (en banc)
(Lourie, J., concurring)). Similarly, in Content Extraction,
the “scanner” that was alleged to be the eligibility-
defining component, was merely the generic hardware
implementing the claimed collection of hardcopy data.
776 F.3d at 1348. Unlike those cases, the claimed combi-
nation of a white list with a bankcard reader to regulate
access to a transit system is not dependent on component
functionality and is not merely a generic computer im-
plementation of an idea or the linkage of an idea to a
particular technological environment. To the contrary,
the claimed combination here is a different way of access-
ing a transit system by using a conventional bankcard
without the need for immediate network connectivity and
without the latency previously considered an inherent
limitation on the use of ordinary bankcards for such
purposes. Even if the bankcard reader itself is considered
similar to the scanner in Content Extraction, nothing in
Content Extraction parallels the combination of a
bankcard reader, a white list, and transit system access
control called for in the claims of the ’003 and ’617 pa-
tents. 2



    2   The majority is critical of the dissent’s analysis as
“conflat[ing]” steps one and two, “ignoring the Supreme
Court directive that the Alice inquiry is a two-step in-
quiry.” Maj. Op. at 17. While some of the step one analy-
14         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



    The claims of the ’003 patent and ’617 patent are not
directed to one of the categories of invention that the
Supreme Court and this court have deemed particularly
suspect. The bankcard white list access control method
here is not a “fundamental economic practice long preva-
lent in our system of commerce,” see Alice, 134 S. Ct. at
2356, a “method of organizing human activity” or human
behavior, see id.; BASCOM, 827 F.3d at 1348, a method of
calculating a number, see Flook, 437 U.S. at 595 n.18, or a
mathematical formula or algorithm, see Benson, 409 U.S.
at 71–72.


sis outlined above may overlap with the analysis called
for in step two, our precedent recognizes the inherently
murky line between the two steps. See Amdocs, 841 F.3d
at 1294 (“Recent cases, however, suggest that there is
considerable overlap between step one and step two, and
in some situations this analysis could be accomplished
without going beyond step one.”); Enfish, 822 F.3d at
1334; Elec. Pwr. Grp., LLC v. Alstom S.A., 830 F.3d 1350,
1353 (Fed. Cir. 2016) (“[T]he two stages involve overlap-
ping scrutiny of the content of the claims . . . there can be
close questions about when the inquiry should proceed
from the first stage to the second.”). Even if the boundary
between steps one and two can somehow be defined—a
proposition I seriously doubt, see supra at 5—the over-
arching objective of the Alice/Mayo framework is not the
making of separate determinations under those steps but
the ultimate determination of patent ineligibility under
the abstract idea rubric. See Amdocs, 841 F.3d at 1294
(“Whether the more detailed analysis is undertaken at
step one or at step two, the analysis presumably would be
based on a generally-accepted and understood definition
of, or test for, what an ‘abstract idea’ encompasses.”). The
majority’s insistence on a hard line between the two steps
is inconsistent with our precedent, of misplaced im-
portance and unnecessarily rigid.
SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.      15



    Finally, the claims of the ’003 patent and the ’617 pa-
tent do not merely reflect a combination of financial and
data transactions. See Maj. Op. at 16–17. The allowance
or refusal of access is no more abstract when performed
using a computer and a card reader than when performed
using a physical token to regulate access to a transit
system by mechanically comparing a token to a slug. In
both cases, the inventions are directed to tangible applica-
tions that serve a new and useful end. Subject to meeting
the other statutory conditions of patentability, they are
equally deserving of patent protection.
    Regulating access to mass transit by comparing
bankcard identifying data with a white list is a tangible
technological solution to the real-world problems of laten-
cy and connectivity. The claims of the ’003 and ’617
patents do not cover the kind of basic building block of
scientific or technological activity that would foreclose or
inhibit future innovation. Instead, they recite limitations
that cannot properly be ignored in enabling conventional
bankcards to be used in regulating access to a transit
system. Under any reasonable application of the Al-
ice/Mayo abstract idea test, consistent with its genesis as
a narrow judicial exception to the broad statutory catego-
ries of patent eligible subject matter and cognizant of the
limitations recited in the claims, I am compelled to con-
clude that the asserted claims of the ’003 and ’617 patents
are not directed to an abstract idea and should not be held
patent ineligible under 35 U.S.C. § 101. I therefore
respectfully dissent from the majority’s holding to the
contrary.
                 B. ’816 and ’390 Patents
    While the representative claims of the ’816 patent and
the ’390 patent place recited fare processing steps in the
environment of a transit system, they differ from the
representative claims of the ’003 and ’617 patents in that
16         SMART SYS. INNOVATIONS, LLC   v. CHI. TRANSIT AUTH.



they contain no limitations controlling access to or other-
wise linking a bankcard with a transit system.
    As the majority recognizes, the ’816 and ’390 patents
relate generally to the processing of data and the perfor-
mance of data calculations and comparisons related to the
funding of transit rides using a bankcard. The inventions,
as claimed, do not link such processing to the means or
mechanism of regulating access to a transit system.
Smart Systems argues that the ’816 and ’390 patent
claims are not abstract because they solve real world
problems relating to fare-processing rules despite the
inability of conventional bankcards to store data. I agree.
The inventions recited in the asserted claims of both of
these patents are the result of human activity and facili-
tate the use of bankcards for a new purpose heretofore
considered practically foreclosed. Regrettably, however,
and for the reasons set forth in the majority opinion, our
precedent leaves no room for such an argument. The
claims of the ’816 patent and the ’390 patent are directed
to what we have generally characterized as a “fundamen-
tal economic practice long prevalent in our system of
commerce,” see Alice 134 S. Ct. at 2356. Such inventions
are categorically rejected as “abstract ideas,” regardless of
merit. While I disagree with such a categorical exclusion,
I am bound by the precedent cited and relied on by the
majority and, for that reason, am constrained to concur
with the majority’s holding of patent ineligibility of the
asserted claims of the ’816 and ’390 patents.
