Software

In Alice Corp Pty. Ltd. v. CLS Bank International, the Supreme Court attempted to clear up the law around 35 U.S.C. §101. The Supreme Court unanimously affirmed the judgment of the Federal Circuit, ruling that all of Alice Corp’s claims were invalid as directed to non-statutory subject matter.

The claims at issue were directed to a computed implemented scheme for mitigating settlement risk using a third party intermediary. In particular, the claims were designed to facilitate the exchange of financial obligations between two parties using a computer system as a third-party intermediary. The intermediary maintains balances in the parties’ real-world accounts, and instructs relevant financial institutions to carry out a transaction if the balances of each parties’ accounts allows such a transaction. The claims included a method claim, a computer system configured to carry out the method, and a computer-readable medium containing program code for performing the method.

The Supreme Court used the two step test from Mayo v. Prometheus to answer the question of whether the claims at issue were directed to non-statutory subject matter. The first step is: are the claims directed to non-statutory subject matter (laws of nature, natural phenomena, and abstract ideas). If the claims are directed to non-statutory subject matter, the second step is addressed, which was described as a “search for an ‘inventive concept’” over and above the ineligible subject matter.

For the first step of the test, the Supreme Court recapped previous decisions including Gottshalk v. Benson, Parker v. Flook, and Bilski v. Kappos. The Supreme Court concluded that an algorithm (Benson and Flook) was an abstract idea, as was “a fundamental economic practice” such as the hedging in Bilski. At the end, the Court held that the claims at issue were drawn to the abstract idea of intermediated settlement which, like hedging, was a “fundamental economic practice long prevalent in our system of commerce.”

For the second step the Court concluded that there was nothing in the claims at issue that transformed them from a patent-ineligible abstract idea to a patent-eligible invention. In particular, the Court explained that the mere recitation of a generic computer was not sufficient to transform the claims to a patent-eligible invention. Moreover, the Court indicated that this analysis applied to system and computer-media claims as well as method claims. The Court indicated that the system claims at issue merely recited a computer system configured to implement the method of intermediated settlement, and therefore did not add significant additional features to the patent-ineligible method.

The full opinion of the Supreme Court can be found here: Alice Corp. Pty. Ltd. v. CLS Bank International

Summary By: Aaron Pederson, associate attorney at Fogg & Powers LLC; Posted: August 19, 2014

The information contained herein is not intended as legal advice but merely conveys general information about law and/or court decision(s).  This information should not be relied upon or used as a substitute for consultation with a licensed professional.  Please consult a licensed professional to obtain advice with respect to any particular legal issue or problem.

The USPTO has issued examination instructions in light of the Supreme Court ruling in Alice, Corp. v. CLS Bank International.  Coverage available at: http://patentlyo.com/patent/2014/06/issues-examination-instructions.html and http://online.wsj.com/articles/supreme-court-sides-with-cls-bank-in-patent-case-1403189441.

Posted: June 26, 2014

The information contained herein is not intended as legal advice but merely conveys general information about law and/or court decision(s).  This information should not be relied upon or used as a substitute for consultation with a licensed professional.  Please consult a licensed professional to obtain advice with respect to any particular legal issue or problem.

After the Supreme Court decision in Bilski v. Kappos was handed down, the USPTO issued a memo to the examining corp regarding application of the Bilski decision. The instructions in the memo follow the Bilski decision in directing the examining corp that the Machine or Transformation test is not the sole test for determining wether a claim is directed to an abstract idea. In particular, a list of factors are set forth in the memo. As indicated by the memo, no factor is conclusive by itself and the applicable factors will vary by case. The memo also suggests that there may be patent-eligible claims that do not pass the Machine or Transformation test as well as patent-ineligible claims that do pass the Machine or Transformation test. However, no examples of such claims are provided in the memo.

Although the memo and some decisions rendered by the Board of Patent Appeals and Interferences discuss other factors, the Machine or Transformation factors were still predominantly used. Indeed, none of the Board decisions studied found that a method claim was not directed at an abstract idea without finding that the method claim met at least one of the prongs of the Machine or Transformation test. Furthermore, none of the Board decisions found a claim that at least implicitly met one of the prongs of the Machine or Transformation test to be directed to an abstract idea. Thus, in applying Bilski at the Board, it appears that the Machine or Transformation test remains the primary tool for analyzing whether a method claim is directed at an abstract idea.

See the bulletin

Posted: October 20, 2011

The information contained herein is not intended as legal advice but merely conveys general information about law and/or court decision(s).  This information should not be relied upon or used as a substitute for consultation with a licensed professional.  Please consult a licensed professional to obtain advice with respect to any particular legal issue or problem.

The United States Supreme Court handed down the much anticipated decision in Bilksi v. Kappos1on June 28, 2010. The Bilski decision concluded that the “Machine or Transformation” test is not the only test for patent eligibility. The question now facing a patent applicant is what other tests is the USPTO going to apply? The first substantive answer to that question was provided by the USPTO on July 27, 2010 in a memo to the examining corp2. The memo provides a list of factors to consider in determining patent eligibility. The factors can be grouped into two tests: the Bilski “Machine or Transformation” test and a modified version of the “Useful, Concrete and Tangible” test3. We will continue to monitor Board decisions to gain further insight into how the USPTO is applying the Bilski decision. Our findings will be published in the near future.

 

1 Bilski v. Kappos, No. 08-964, slip op. (U.S. June 28, 2010)

2 Memo to Patent Examining Corps, Interim Guidance for Determining Subject Matter Eligibility for Process Claims in view of Bilski v. Kappos, July 27, 2010.

3 See MPEP §2106(IV)(C)(2)

Posted: August 1, 2010

The information contained herein is not intended as legal advice but merely conveys general information about law and/or court decision(s).  This information should not be relied upon or used as a substitute for consultation with a licensed professional.  Please consult a licensed professional to obtain advice with respect to any particular legal issue or problem.