Identitii Limited v. JPMorgan Chase — Court Invalidates Blockchain Financial Transaction Patent Under Alice

Background

Identitii Limited, an Australian financial technology company, sued JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A. in October 2023, alleging infringement of U.S. Patent No. 10,984,413 (the “’413 Patent”). The patent covers a method and system for processing financial transactions using blockchain technology, tokens, enriched data records, and a messaging bus to track transaction attributes.

The patent was born from a real problem: prior systems for settling financial transactions relied on one-way data transmissions that lacked the bandwidth for rich data sets, leading to labor-intensive checking and reconciliation before transactions could be completed. The ’413 Patent proposed using blockchain — a distributed ledger that records transactions in sequential blocks — to store enriched data records and generate tokens corresponding to each financial transaction, all coordinated through a messaging bus connecting intermediary servers, token servers, and document stores.

JPMorgan moved to dismiss under Rule 12(b)(6), arguing that all claims of the ’413 Patent are directed to patent-ineligible subject matter under 35 U.S.C. § 101.

The Court’s Holding

Judge Williams granted the motion to dismiss, finding the patent invalid under the Supreme Court’s two-step Alice framework.

At Alice Step One, the court found that representative Claim 15 is directed to the abstract idea of “processing a financial transaction on the blockchain.” The court walked through each claim limitation — intermediary servers, token servers, messaging buses, document stores, and blockchain ledgers — and found that each maps to a generic component performing a conventional function. Stringing these abstract ideas together in sequence does not transform them into something patentable. The court relied on PersonalWeb Technologies v. Google LLC (Fed. Cir. 2021), which held that a combination of individually abstract data-processing steps remains abstract even when viewed as a whole.

Identitii argued its patent was more like Ancora v. HTC (Fed. Cir. 2018), where claims directed to a specific computer-architecture improvement survived Step One. The court disagreed, finding a critical distinction: Identitii’s patent does not claim to improve blockchain technology itself. The patent merely runs an existing process (financial transaction processing) on a newer platform (blockchain), which the court found “analogous to the improvements offered by practicing a manual process on a computer.”

At Alice Step Two, the court found no inventive concept. Identitii did not contend it invented blockchain technology or tokenization. The patent’s specification even disclaimed any unconventional ordering of method steps, undermining the argument that the “ordered combination” of claim elements supplied the inventive concept. The court distinguished BASCOM v. AT&T (where a specific arrangement of filtering components at a particular ISP server location was inventive) and Amdocs v. Openet Telecom (where specific enhancing limitations incorporated a distributed architecture), finding the ’413 Patent simply arranges known conventional components on a conventional blockchain in a conventional manner.

The complaint was dismissed with prejudice, as the court found any amendment would be futile.

Key Takeaways

• Simply applying blockchain technology to a traditional financial process is not enough to create patent-eligible subject matter — the patent must claim an improvement to the technology itself, not just its application to a known problem.
• A patent specification that disclaims any unconventional ordering of steps will undermine Step Two arguments that the “ordered combination” of elements supplies an inventive concept.
• Courts continue to apply the PersonalWeb principle that combining multiple individually abstract steps does not escape Step One merely because the combination is novel.
• The decision reinforces the high bar for blockchain and fintech patents in the wake of Alice, particularly when the claimed system uses generic blockchain components for their conventional purposes.

Why It Matters

This ruling is another data point in the ongoing struggle of blockchain and fintech patents to survive Section 101 challenges. For companies building blockchain-based financial infrastructure, the message is clear: simply layering blockchain onto traditional banking processes will not produce patent-eligible claims. To survive scrutiny, patent claims need to target a specific technical improvement to how the blockchain itself functions, not merely apply it as a faster or more transparent replacement for existing technology. The decision is also notable for the court’s observation that the patent’s own specification — by disclaiming any required ordering of steps — effectively conceded that its architecture was conventional, a cautionary lesson for patent drafters working in the blockchain space.