CLS Bank International et al. v. Alice Corporation Pty. Ltd.


Docket No. 2011-1301

LINN, PROST (D), O’MALLEY
July 9, 2012

Brief Summary: The panel held that “when 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.”

Summary: The DC decision that Alice’s four patents relating to a computerized trading platorm (system and product (“media”)) is not patentable under 35 USC 101 was reversed. The platform is used to eliminate “settlement risk” which occurs between the time a contract is made and money is exchanged (e.g., between banks). The DC concluded that the “nominal recitation of a general-purpose computer in a method claim does not tie the claim to a particular machine or apparatus or save the claim from being found unpatentable under § 101” (machine or transformation test) and that the claims (including the product claims) were directed to an abstract concept (Bilski II). The FC panel noted that while “Congress intended statutory subject matter to ‘include anything under the sun that is made by man’” (Diamond, US 1980), not everything can be patented (e.g., “laws of nature, physical phenomena, and abstract ideas” (Bilski II, US 2010)). The opinion attempts to clarify what is and is not an “abstract idea”, citing Morse (US 1853) (claim at issue would have effectively “shut[] the door against inventions of other persons . . . in the properties and powers of electro-magnetism” because “it matters not by what process or machinery the result is accomplished.”), Gottshalk (US 1972) (claim directed to a mathematical formula with “no substantial practical application except in connection with a digital computer” was directed to an unpatentable abstract idea because “the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on an algorithm itself.”), Flook (US 1978) (mere field of use limitations—there, to the oil refining and petrochemical industries—or the addition of “post-solution” activity— there, adjusting an “alarm limit” according to a claimed mathematical calculation—could not “transform an unpatentable principle into a patentable process.”), and Diehr (US 1981) (claims directed to a process for curing rubber using the mathematical “Arrhenius” equation did not “pre-empt the use of that equation.”) The panel also explained that “[c]laims that are directed to no more than a fundamental truth and foreclose, rather than foster, future innovation are not directed to patent eligible subject matter under § 101” and “[t]he mere implementation on a computer of an otherwise ineligible abstract idea will not render the asserted ‘invention’ patent eligible” (citing Fort Props., FC 2011 and Dealertrack, FC 2012) but “a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible”. Thus, it held “that 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.” In this case, the panel concluded that the DC had ignored “claim limitations in order to abstract a process down to a fundamental truth”, and therefore reversed. The dissent argued that the decision was contrary to Mayo (US 2012), which iterated “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment” (“merely recites the steps of performing as an intermediary in a financial transaction”).

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