Boom! Payments, Inc. v. Stripe, Inc.

B
Case: 20-1274    Document: 48    Page: 1    Filed: 01/13/2021




        NOTE: This disposition is nonprecedential.


   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                BOOM! PAYMENTS, INC.,
                   Plaintiff-Appellant

                            v.

    STRIPE, INC., SHOPIFY (USA) INC., SHOPIFY
                       INC.,
                Defendants-Appellees
               ______________________

                       2020-1274
                 ______________________

    Appeal from the United States District Court for the
 Northern District of California in No. 3:19-cv-00590-VC,
 Judge Vince Chhabria.
                 ______________________

                Decided: January 13, 2021
                 ______________________

      BENJAMIN T. WANG, Russ August & Kabat, Los Ange-
 les, CA, for plaintiff-appellant. Also represented by AMY
 HAYDEN, THERESA MARY TROUPSON.

     JARED BOBROW, Orrick, Herrington & Sutcliffe LLP,
 Menlo Park, CA, for defendant-appellee Stripe, Inc. Also
 represented by MARGARET ABERNATHY, Los Angeles, CA;
 MELANIE L. BOSTWICK, Washington, DC.
Case: 20-1274     Document: 48     Page: 2    Filed: 01/13/2021




 2                        BOOM! PAYMENTS, INC.   v. STRIPE, INC.



     MICHAEL RENAUD, Mintz, Levin, Cohn, Ferris, Glovsky
 and Popeo, PC, Boston, MA, for defendants-appellees
 Shopify (USA) Inc., Shopify Inc. Also represented by PETER
 F. SNELL, New York, NY.
                 ______________________

     Before LOURIE, O’MALLEY, and REYNA, Circuit Judges.
 LOURIE, Circuit Judge.
      Boom! Payments, Inc. (“Boom”) appeals from a decision
 of the United States District Court for the Northern Dis-
 trict of California holding that the claims of U.S. Patents
 8,429,084 (“’084 patent”), 9,235,857 (“’857 patent”), and
 10,346,840 (“’840 patent”) are ineligible for patent under
 35 U.S.C. § 101. See Boom! Payments, Inc. v. Stripe, Inc.,
 No. 3:19-cv-00590-VC, 

2019 WL 6605314

(N.D. Cal. Nov.
 19, 2019) (“Decision”). Because we agree with the district
 court that the patents claim patent-ineligible subject mat-
 ter, we affirm.
                        BACKGROUND
     Boom owns the ’084, ’857, and ’840 patents (collectively
 “the asserted patents”), which are generally directed to sys-
 tems and methods for confirming that a transaction has
 been consummated prior to releasing electronic payment. 1
 The patents explain that, in some circumstances, buyers
 and sellers may not wish to exchange payment directly at
 the time of a transaction. For example, where a buyer and
 seller are connected through an online platform, such as
 Craigslist, but meet in person to exchange goods, the buyer
 may not wish to authorize payment before the parties have
 met and the buyer has an opportunity to inspect and take
 possession of the goods. Alternatively, small businesses


      1  Because the ’084, ’857, and ’840 patents share the
 same written description, all citations are to the ’084 pa-
 tent unless specified otherwise.
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 BOOM! PAYMENTS, INC.   v. STRIPE, INC.                        3



 may prefer to use a third party to process electronic pay-
 ments rather than accept payment directly. In both situa-
 tions, the patent explains, “some way is needed to reliably
 confirm that a local marketplace transaction has been con-
 summated to facilitate reliable online payment consumma-
 tion.” ’084 patent col. 2 ll. 59–61.
      The patents purport to solve this problem by providing
 an Internet-based system, such as an online marketplace,
 that facilitates payments between buyers and sellers. Buy-
 ers can search for items in the online marketplace and ten-
 tatively agree to purchase an item from a particular seller
 for a negotiated price. To initiate the transaction, the
 buyer provides payment information to the system, such as
 credit or debit card information, which is stored in a data-
 base.

Id. col. 5 ll.

6–15. A unique “buyer identifier” is then
 generated and provided to the buyer. Once the transaction
 has been consummated, such as when the buyer and seller
 physically meet and the buyer accepts the items from the
 seller, the buyer provides the buyer identifier to the seller.

Id. col. 7 ll.

3–8. The seller then provides the buyer identi-
 fier to the online marketplace as evidence that the trans-
 action has been consummated, and payment is authorized.

Id. col. 7 ll.

9–29.
     Claim 1 of the ’840 patent is illustrative and recites:
     1. An Internet-based computer system for confirm-
     ing that a proposed sale transaction has been con-
     summated, said Internet-based computer system
     including a payment processor system comprising
     at least one computer device programmed to:
     receive a buyer’s payment information and store
     said payment information;
     prior to a sale of an at least one item associated
     with an online store of a seller to said buyer, re-
     ceive, at said payment processor system, a request
     transmitted from a buyer computer device for said
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 4                         BOOM! PAYMENTS, INC.   v. STRIPE, INC.



     buyer to be able to purchase at least one item of-
     fered for sale by said online store;
     in response to said request, generate a transaction-
     specific buyer acceptance identifier comprising a
     combination of human-readable characters;
     provide said transaction-specific buyer acceptance
     identifier to said buyer computer device;
     store in computer-accessible memory associated
     with said payment processor system a record com-
     prising a relationship between said transaction-
     specific buyer acceptance identifier, a buyer-spe-
     cific identifier, and a seller-specific identifier;
     receive from a seller computer device an identifier
     of the transaction, an identifier of the buyer, and
     an identifier of the seller;
     compare the identifier of the transaction with the
     transaction-specific buyer acceptance identifier;
     compare the identifier of the buyer with the buyer-
     specific identifier;
     compare the identifier of the seller with the seller-
     specific identifier; and
     if said identifier of the transaction corresponds to
     the transaction-specific identifier, said identifier of
     the buyer corresponds to the buyer-specific identi-
     fier, and said identifier of the seller corresponds to
     the seller-specific identifier, charge an account as-
     sociated with the buyer for an amount associated
     with the request to purchase at least one item of-
     fered for sale by said online store.
 ’840 patent col. 24 l. 61–col. 25 l. 34.
     Boom asserted the ’084 and ’857 patents against Stripe,
 Inc., Shopify (USA) Inc., and Shopify Inc. (collectively
 “Stripe”) in the United States District Court for the
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 BOOM! PAYMENTS, INC.   v. STRIPE, INC.                      5



 Northern District of California, alleging infringement of “at
 least” claim 7 of each patent. See Complaint & Jury De-
 mand, Boom! Payments, Inc. v. Stripe, Inc., No. 3:19-cv-
 00590-VC (N.D. Cal. Feb. 1, 2019), ECF No. 1. Stripe
 moved to dismiss Boom’s complaint under Fed. R. Civ. P.
 12(b)(6), arguing that the patents claim subject matter in-
 eligible under 35 U.S.C. § 101. See Motion to Dismiss,
 Boom! Payments, Inc. v. Stripe, Inc., No. 3:19-cv-00590-VC
 (N.D. Cal. April 29, 2019), ECF No. 32. In response, Boom
 sought leave to amend its claim, which the district court
 granted, and added counts alleging infringement of “at
 least” claim 1 of the ’840 patent, which had issued since
 Boom filed its initial complaint. See Amended Complaint,
 Boom! Payments, Inc. v. Stripe, Inc., No. 3:19-cv-00590-VC
 (N.D. Cal. July 10, 2019), ECF No. 44. Stripe again moved
 to dismiss. Stripe argued that the three claims identified
 in Boom’s amended complaint are representative of all
 claims of the asserted patents and that the amended com-
 plaint should therefore be dismissed with respect to all
 claims. See Motion to Dismiss Plaintiff’s First Amended
 Complaint, Boom! Payments, Inc. v. Stripe, Inc., No. 3:19-
 cv-00590-VC (N.D. Cal. Aug. 12, 2019), ECF No. 51.
     The district court considered the claims under the Su-
 preme Court’s two-step Alice framework for determining
 patent eligibility, specifically addressing the three claims
 identified in Boom’s amended complaint. At step one, the
 court observed that the claims “combine the concept of es-
 crow—using a third party to hold payment until a condition
 is satisfied—with the idea of using identification codes to
 authorize a transaction” and concluded that the claims are
 directed to the abstract idea of authenticating Internet
 sales through the use of a third-party intermediary. Deci-
 sion, 

2019 WL 6605314

, at *1. At step two, the court deter-
 mined that the claims do not recite an inventive concept
 sufficient to transform them into patent-eligible subject
 matter because they merely describe a computerized es-
 crow system.

Id. The court rejected

Boom’s argument that
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 6                        BOOM! PAYMENTS, INC.   v. STRIPE, INC.



 factual allegations in its complaint preclude dismissal un-
 der Rule 12(b)(6), specifically finding that Boom’s allega-
 tions are legal conclusions that the court is not bound to
 accept or are otherwise of no consequence to the eligibility
 analysis. Accordingly, the court granted Stripe’s motion to
 dismiss.
     Boom appealed. We have jurisdiction under 28 U.S.C.
 § 1295(a)(1).
                         DISCUSSION
     We review the grant of a motion to dismiss under the
 law of the regional circuit. OIP Techs., Inc. v. Amazon.com,
 Inc., 

788 F.3d 1359

, 1362 (Fed. Cir. 2015) (citing K–Tech
 Telecomms., Inc. v. Time Warner Cable, Inc., 

714 F.3d 1277

, 1282 (Fed. Cir. 2013)). The Ninth Circuit reviews
 dismissals under Rule 12(b)(6) de novo, accepting all fac-
 tual allegations as true and drawing all reasonable infer-
 ences in the plaintiff’s favor. Barrett v. Belleque, 

544 F.3d 1060

, 1061 (9th Cir. 2008) (citing Weilburg v. Shapiro, 

488 F.3d 1202

, 1205 (9th Cir. 2007)).
     Patent eligibility under § 101 is an issue of law that
 may contain underlying issues of fact. See Berkheimer v.
 HP Inc., 

881 F.3d 1360

, 1365 (Fed. Cir. 2018). We review
 the district court’s ultimate conclusion on patent eligibility
 de novo.

Id. To determine whether

a patent claims eligible
 subject matter, we follow the Supreme Court’s familiar
 two-step framework. See Alice Corp. v. CLS Bank Int’l, 

573 U.S. 208

, 217 (2014); Mayo Collaborative Servs. v. Prome-
 theus Labs., Inc., 

566 U.S. 66

, 70–73 (2012). First, we de-
 termine whether the claims are directed to a law of nature,
 natural phenomenon, or abstract idea. 

Alice, 573 U.S. at 217

. If not, then the claims are patent-eligible and the in-
 quiry is over. If so, we proceed to the second step and de-
 termine whether the claims nonetheless include an
 “inventive concept” sufficient to “‘transform the nature of
 the claim’ into a patent-eligible application.”

Id. (quoting Mayo, 566

U.S. at 72, 78). To recite an “inventive concept,”
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 BOOM! PAYMENTS, INC.   v. STRIPE, INC.                      7



 at step two, a patent must do more than recite an abstract
 idea “while adding the words ‘apply it.’” 

Alice, 573 U.S. at 221

(quoting 

Mayo, 566 U.S. at 72

). “[S]imply appending
 conventional steps, specified at a high level of generality,
 to laws of nature, natural phenomena, and abstract ideas
 cannot make those laws, phenomena, and ideas patenta-
 ble.” 

Mayo, 566 U.S. at 82

. Likewise, “the mere recitation
 of a generic computer cannot transform a patent-ineligible
 abstract idea into a patent-eligible invention.” 

Alice, 573 U.S. at 223

.
     At step one, Boom argues that the claims are not di-
 rected to an abstract idea, but rather to a technological im-
 provement over prior art systems for confirming and
 processing online payments. Specifically, Boom argues
 that the elements of the claims provide specific steps for
 processing an online payment, and therefore are not di-
 rected to the general concept of escrow. Stripe responds
 that the claims are directed to an abstract idea because
 they recite nothing more than payment escrow executed by
 a computer system and that the specific steps of the claims
 are nothing more than the steps necessary to perform that
 function.
       We agree with Stripe that the claims are directed to the
 abstract idea of payment escrow. They only describe steps
 of passing information back and forth by a computer. The
 very purpose of the patents, as explained in the written de-
 scription, is verifying consummation of a transaction before
 releasing payment by a third party, which is the definition
 of escrow. See MERRIAM-WEBSTER, www.merriam-web-
 ster.com/dictionary/escrow (defining “escrow” as “money
 . . . held in trust by a third party to be turned over to the
 grantee only upon fulfillment of a condition”). Here, pay-
 ment is held by the third-party Internet-based computer
 system and released to the seller only upon the fulfillment
 of a condition—specifically, upon receiving confirmation
 that the items sold have been transferred to the buyer. In-
 deed, the claims are reminiscent of those at issue in Alice,
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 8                          BOOM! PAYMENTS, INC.   v. STRIPE, INC.



 in which the Supreme Court held that claims directed to
 “exchanging financial obligations between two parties us-
 ing a third-party intermediary to mitigate settlement risk”
 are directed to an abstract idea. 

Alice, 573 U.S. at 219

.
      Boom relies on multiple aspects of the claims in assert-
 ing the non-abstract nature of the claims, none of which are
 availing. First, Boom relies on the use of the buyer identi-
 fier as the specific means for confirming consummation of
 the transaction to distinguish its system from conventional
 escrow. But use of an identification code known only to the
 buyer and the third party to verify a transaction could be
 performed just as readily without the use of computers and
 cannot be said to be a “technological” solution that im-
 proves the functioning of a computer system. We agree
 with the district court that, at most, the use of an identifi-
 cation code does nothing more than overlay a second layer
 of abstraction—specifically, identity authentication—on
 the escrow procedure described by the claims. Boom also
 relies on the specificity of the claims to establish eligibility.
 In its briefing, Boom describes the allegedly specific steps
 of the claims as “receiv[ing] a buyer’s payment information,
 and thereafter, upon a later receipt of a request by the
 buyer to purchase an item online, generat[ing] a transac-
 tion-specific buyer acceptance identifier that is then used
 not only in lieu of the buyer’s payment information but also
 as the means for the seller to indicate confirmation of the
 transaction when the seller later returns a corresponding
 identifier.” Appellant’s Br. at 28–29. However, we agree
 with Stripe that these steps only explicate the necessary
 steps of an escrow arrangement and do not change the di-
 rection of the claims. Accordingly, we conclude that the
 claims are directed to an abstract idea at step one.
     Having concluded that the claims are directed to an ab-
 stract idea, we consider whether they describe an inventive
 concept at step two. Boom argues that use of the buyer
 identifier constitutes an inventive concept because it “in-
 crease[s] online payment security without making the
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 BOOM! PAYMENTS, INC.   v. STRIPE, INC.                      9



 payment flow burdensome on either the buyer or the seller”
 by “removing the need for any static buyer payment infor-
 mation, such as credit card numbers.” Appellant’s Br. at
 48. Boom also argues that the order and timing of the spe-
 cific steps of the claims are inventive improvements over
 prior art systems. Boom argues that, at a minimum, it has
 pleaded allegations that the elements of the claims are not
 routine and conventional sufficient to preclude dismissal
 under Rule 12(b)(6).
     Stripe responds that the alleged inventive concepts
 identified by Boom are nothing more than the same ab-
 stract ideas identified at step one and that Boom’s bare as-
 sertions that the claim elements are not routine or
 conventional are insufficient to create a genuine issue of
 material fact at step two.
      We agree with Stripe. As we explained with respect to
 step one, the order and timing of the claim elements are
 merely the necessary steps of executing payment escrow
 and so do not constitute an inventive concept. Similarly,
 the use of the buyer identifier to confirm consummation of
 the transaction serves only to authenticate the transaction
 and is not rooted in a technological problem or solution. In
 any event, the written description acknowledges that such
 confirmation codes were routine prior to the date of the in-
 vention. ’084 patent col. 2 ll. 7–11 (describing shipment
 confirming information as “reliable confirmation that the
 transaction has been consummated”). Accordingly, we con-
 clude that the patents do not recite an inventive concept
 sufficient to transform the claims into patent-eligible sub-
 ject matter.
     We also agree with Stripe and the district court that
 Boom’s allegations that the limitations of its claims are not
 routine or conventional do not preclude dismissal under
 Rule 12(b)(6). In its amended complaint, Boom makes nu-
 merous allegations that the patented inventions are not
 routine or conventional at the time of the invention. But
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 10                        BOOM! PAYMENTS, INC.   v. STRIPE, INC.



 while we are required to accept the plaintiff’s allegations
 as true in reviewing the grant of a motion to dismiss, “[w]e
 disregard conclusory statements when evaluating a com-
 plaint under Rule 12(b)(6).” Simio, LLC v. FlexSim Soft-
 ware Prods., Inc., ___ F.3d ___, 

2020 WL 7703014

at *9
 (Fed. Cir. 2020). That is the case here. Boom’s amended
 complaint repeatedly asserts that its claims are not routine
 or conventional but does not provide plausible factual alle-
 gations to support those assertions. See Amended Com-
 plaint, Boom! Payments, Inc. v. Stripe, Inc., No. 3:19-cv-
 00590-VC (N.D. Cal. July 10, 2019), ECF No. 44, at 10 ¶ 29
 (“The particularized manner in which the ‘transaction spe-
 cific buyer acceptance identifier’ and ‘transaction consum-
 mation completion identifier’ of the claims of the Asserted
 Patents are generated, stored, used, and related to other
 identifiers was not well-understood, routine, or conven-
 tional at the time of Mr. Bogaard’s inventions.”);

id. at 12– 13 ¶ 38

(“The claims include specific limitations and a com-
 bination of limitations that are inventive and which were
 not well-understood, routine, conventional activity in the
 field at the time of the inventions.”). Because Boom’s
 amended complaint includes only conclusory allegations,
 the district court did not err in granting Stripe’s motion to
 dismiss.
      Finally, we conclude that the remaining claims of the
 asserted patents are directed to substantially similar sub-
 ject matter as the three claims specifically addressed by the
 district court, and therefore affirm the dismissal of Boom’s
 complaint with respect to all claims. Boom asserts that the
 district court’s decision applies only to the three claims spe-
 cifically addressed by the court’s order, but we reject
 Boom’s contention as overly formalistic. “Courts may treat
 a claim as representative in certain situations, such as if
 the patentee does not present any meaningful argument
 for the distinctive significance of any claim limitations not
 found in the representative claim.” 

Berkheimer, 881 F.3d at 1365

. Here, it is evident that the three claims were
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 BOOM! PAYMENTS, INC.   v. STRIPE, INC.                    11



 treated as representative even though the district court did
 not specifically denote them as such. Having determined
 that certain specific claims of the asserted patents are in-
 eligible, it would defy reason to allow substantially identi-
 cal claims to remain the subject of further litigation. This
 conclusion is not inconsistent with the basic proposition
 that only asserted and litigated claims are before an appel-
 late court for review. Boom did not limit its infringement
 allegations to only the three claims cited in the district
 court opinion, instead alleging infringement of “at least”
 claim 7 of the ’084 patent, claim 7 of the ’857, and claim 1
 of the ’840 patent. See Amended Complaint, Boom! Pay-
 ments, Inc. v. Stripe, Inc., No. 3:19-cv-00590-VC (N.D. Cal.
 July 10, 2019), ECF No. 44, at 22 ¶ 66, 34 ¶ 90, 46 ¶ 114.
 And in its motion to dismiss, Stripe argued that those
 claims are representative and sought dismissal of all
 claims. See Motion to Dismiss Plaintiff’s First Amended
 Complaint, Boom! Payments, Inc. v. Stripe, Inc., No. 3:19-
 cv-00590-VC (N.D. Cal. Aug. 12, 2019), ECF No. 51, at 4.
 Because the remaining claims are substantially similar
 and directed to the same abstract idea, we affirm the dis-
 trict court’s dismissal of Boom’s complaint with respect to
 all claims of the ’084, ’857, and ’840 patents.
                          CONCLUSION
     We have considered Boom’s remaining arguments but
 find them unpersuasive. For the foregoing reasons, the
 judgment of the district court is affirmed.
                         AFFIRMED

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