On May 10, 2013, the Federal Circuit issued its decision in CLS Bank International et al. v. Alice Corporation Pty, Ltd., (2011-1301), which it decided en banc in order to address two questions:
- What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible "abstract idea"; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?
- In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?
CLS Bank Int'l v. Alice Corp., 484 F. App'x.
559 (Fed. Cir. 2012).
In a short per curiam opinion, the court held:
The court then issued six additional opinions, none of
which was joined by a majority of the court.
Judge Lourie (in an opinion joined by
Judges Dyk, Prost, Reyna and Wallach), restated the two-part test
for determining patent-eligible subject matter:
Judge Lourie stated that this test has proved difficult to
apply, which he suggested was due to the inability to consistently
and predictably differentiate between claims that would tie up laws
of nature, natural phenomena, or abstract ideas and claims that
merely "embody, use, reflect, rest upon, or apply" those
fundamental tools. Lourie Op. at 9 (citing Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293
(2012).)
Judge Lourie then identified three guideposts to a § 101
analysis based on US Supreme Court precedent:
- patents should not be allowed to preempt the fundamental tools of discovery—those must remain "free to all . . . and reserved exclusively to none";
- courts should avoid overly formalistic approaches to subject-matter eligibility that invite manipulation by patent applicants; and
- courts should apply a flexible, claim-by-claim approach to subject-matter eligibility that avoids rigid line drawing.
Lourie Op. at 15-17.
Addressing the asserted claims of the Alice patents, Judge
Lourie identified the abstract idea and then looked to see whether
the rest of the claim adds "significantly more." Lourie
Op. at 26. Finding that these claims did not, Judge Lourie found
the asserted claims not directed to patent-eligible subject matter.
Lourie Op. at 28 ("But for the implied requirement for
computer implementation, the broad, non-technical method claims
presented here closely resemble those in Bilski, which
also explained a 'basic concept of . . . protecting against
risk.'" (citations omitted).)
In a concurring-in-part and dissenting-in-part opinion,
Chief Judge Rader (joined by Judges Linn,
Moore and O'Malley), began his analysis with Alice's
asserted system claims, stating that a computer-implemented
invention is eligible for patenting under § 101 because
computers are "machines." Rader Op. at 27. Thus, the
issue was whether the system claims were barred from patent
eligibility because they claimed an abstract idea. Id. at
28. Chief Judge Rader would have found that Alice's system
claims are patent eligible because "[the system] claims do not
claim only an abstract concept without limitations that tie it to a
practical application." Id. at 35. He stated that an
escrow arrangement can be used in many applications without
computer systems, and even with computers but in ways that do not
infringe the claims. Next, Chief Judge Rader tested the additional
elements beyond the abstract idea of an escrow present in the claim
and found that the recited steps are not inherent in the process of
using an escrow. In addition, Chief Judge Rader found that these
limitations are not stated at a high level of generality.
"Because of the number and specificity of the structural
limitations, these claims have narrow, if any, relevant pre-emptive
effect." Radar Op. at 37.
When reviewing Alice's asserted method and media claims, Chief
Judge Rader agreed that these claims are not eligible for patenting
under § 101, finding that they were abstract: "each step
individually recites merely a general step inherent within the
concept of an escrow." Id. at 41. He explained that
an escrow is an abstract concept and "the attempt to limit the
escrow concept to a particular field is not sufficient" to
make it patent-eligible. Id. at 42.
Dissenting-in-part, Judge Moore (joined
by Chief Judge Rader and Judges Linn and O'Malley), wrote to
express her concern "that the current interpretation of §
101, and in particular the abstract idea exception, is causing a
free fall in the patent system." Moore Op. at 1-2.
Specifically, Judge Moore wrote that "[h]olding that all of
these claims are directed to no more than an abstract idea gives
staggering breadth to what is meant to be a narrow judicial
exception. And let's be clear: if all of these claims,
including the system claims, are not patent-eligible, this case is
the death of hundreds of thousands of patents, including all
business method, financial system, and software patents as well as
many computer implemented and telecommunications patents."
Id. at 2. Noting that many of the recent Supreme Court
§ 101 cases found no patent eligible subject matter, Judge
Moore indicated that this case presents an opportunity for the
Supreme Court to distinguish between claims that are and are not
directed to patentable subject matter.
In a concurring-in-part opinion, Judge
Newman stated that she believed the court missed an
opportunity to provide clarity to § 101 jurisprudence and
proposed that "the court resolve the present impasse by
returning to the time-tested principles of patent law":
- The court should hold that § 101 is an inclusive statement of patent-eligible subject matter. Newman Op. at 3.
- The court should hold that the form of the claim does not determine § 101 eligibility. Newman Op. at 4.
- The court should confirm that experimental use of patented information is not barred. Id.
In a dissenting opinion, Judge Linn
(joined by Judge O'Malley) expressed his view that the Alice
asserted method, media, and system claims must rise and fall
together—either they are all patent eligible or they are not.
He stated that the analyses of the method claims conducted by Chief
Judge Rader's opinion and Judge Lourie's opinion are
divorced from the record, including stipulations by which CLS
agreed to be bound. Judge Linn would apply the same analysis Chief
Judge Rader applied to the system claims to find the method, media
and system claims patent eligible.
In additional reflections, Chief Judge
Rader counseled that courts should focus on the
language of the patent statute. Chief Judge Rader noted that the
statute offers patents to both inventions and discoveries,
including simply an improvement on a known process or product, so
long as they meet the conditions of patentability set forth in
§ 102 and 103 of the Patent Act. He stated that § 101 is
not a condition of patentablity and that the statute does not list
§ 101 among invalidity defenses to infringement.
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