Patent Law

H&R Block v. Jackson Hewitt (E.D. Tex. 2009)

E.D. Texas Magistrate Judge Love has recommended that H&R Block's advance-tax-refund patents be held invalid for failing to claim patentable subject matter under Bilski. The claims in question are all directed toward either a "computerized system" or "computer-implemented method." Quoting Nuijten, the court first held that Bilski controls both system and method claims ? since a "court should not be 'overly concerned with pigeonholing subject matter once the court assures itself that some category has been satisfied.'"

The claimed invention involves issuing a cash-advance to income tax filers and then retaining a right to receive payment from the government.

The court held that none of the claims satisfied the particular-machine-or-transformation test. The "computerized system" claims did not identify a "particular, special purpose machine" that was more than "an insignificant, extra-solution component of the claimed invention." Likewise, the transformation of "tax return data" into a "spending vehicle" is not the type of transformation required under the test.

"At all steps in the claimed processes, the manipulated data represent legal obligations and relationships. However described, the data and resulting loan represent money. Although tangible in some forms, money is simply a representation of a legal obligation or abstract concept."

Claim 1 of Patent 7,072,862 reads as follows:

1. A computerized system for distributing spending vehicles comprising:

2. • a payment due from a governmental entity;
   • an assignable right to receive said payment from said governmental entity, said assignable right held by an individual;
   • a spending vehicle offered by a third party sponsor to said individual in exchange for at least a portion of said individual's right to receive said payment due;
   • an assignment of at least a portion of said individual's right to receive said payment to said third party sponsor in exchange for said spending vehicle;
   • wherein information associating said payment with said spending vehicle from said third party sponsor is stored in and retrieved from a computer to facilitate processing of said spending vehicle and said spending vehicle is issued to said individual in an amount for spending by said individual of said at least a portion of said payment, said governmental entity is electronically notified to transfer said at least a portion of said payment to said third party sponsor, and said at least a portion of said payment is received by said third party sponsor.