CLS Bank v. Alice Corp. - Federal Circuit Revisits Test for Software Patent Eligibility

Today, the Federal Circuit granted appellees CLS Bank International and CLS Services Ltd.'s petition for a rehearing en banc, vacated the Federal Circuit's Alice Corp. v. CLS Bank decision on software patent eligibility, and reinstated the appeal. The en banc decision may be significant to software patent owners and anyone facing software patent assertions.

Representative claim 1 of U.S. Patent No. 7,149,720 describes a data processing system that includes a computer configured (i.e., programmed) to perform certain steps:

1. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a data storage unit having stored therein information about a shadow credit record and shadow debit record for a party, independent from a credit record and debit record maintained by an exchange institution; and

a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust said shadow credit record and/or said shadow debit record in order to effect an exchange obligation arising from said transaction, allowing only those transactions that do not result in a value of said shadow debit record being less than a value of said shadow credit record; and (c) generate an instruction to said exchange institution at the end of a period of time to adjust said credit record and/or said debit record in accordance with the adjustment of said shadow credit record and/or said shadow debit record, wherein said instruction being an irrevocable, time invariant obligation placed on said exchange institution.

The Federal Circuit majority held when—after taking all of the claim recitations into consideration—it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101…Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea” under 35 U.S.C. § 101.

So the "nothing more" test lasted three months. How apt! And now the Federal Circuit invites the parties and amici to file briefs addressing the following questions:

a. 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?

b. 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?

The court invites the views of the USPTO as amicus curiae. Other amici curiae briefs may be filed without consent and leave of court in compliance with Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29.

I expect many amici briefs will be filed seeking to influence the Federal Circuit's test for software patent eligibility.

Copyright © 2012 Robert Moll. All rights reserved.