United States Court of Appeals 

for the Federal Circuit 

__________________________ 

BANCORP SERVICES, L.L.C., 

Plaintiff-Appellant, 

v. 

SUN LIFE ASSURANCE COMPANY OF CANADA 

(U.S.), 

Defendant-Appellee, 

AND 

ANALECT LLC, 

Defendant. 

__________________________ 

2011-1467 

__________________________ 

Appeal from the United States District Court for the 

Eastern District of Missouri in Case No. 00-CV-1073, 

Judge Carol E. Jackson. 

__________________________ 

Decided: July 26, 2012 

__________________________ 

DAVID A. PERLSON, Quinn Emanuel Urquhart & Sullivan, of San Francisco, California, argued for plaintiffappellant. With him on the brief was CHARLES K.

VERHOEVEN; and IAN S. SHELTON, of Los Angeles, California. 
BANCORP SERVICES v. SUN LIFE 2

MATTHEW B. LOWRIE, Foley & Lardner, LLP, of Boston, Massachusetts, argued for the defendant-appellee. 

With him on the brief were AARON W. MOORE and KEVIN 

M. LITTMAN. 

__________________________ 

Before LOURIE, PROST, and WALLACH, Circuit Judges. 

LOURIE, Circuit Judge. 

Bancorp Services, L.L.C. (“Bancorp”) appeals from the 

final decision of the U.S. District Court for the Eastern 

District of Missouri, which entered summary judgment 

that the asserted claims of U.S. Patents 5,926,792 and 

7,249,037 (the “’792 patent” and “’037 patent”) are invalid 

under 35 U.S.C. § 101. See Bancorp Servs., L.L.C. v. Sun 

Life Assurance Co., No. 4:00-cv-1073 (E.D. Mo. May 25, 

2011) (Final Judgment), ECF No. 411. We affirm. 

BACKGROUND

Bancorp owns the ’792 and ’037 patents, both entitled 

“System for Managing a Stable Value Protected Investment Plan.” The patents share a specification and the 

priority date of September 1996. The ’792 patent has 

been the subject of two prior appeals to this court. See

Metro. Life Ins. Co. v. Bancorp Servs., L.L.C., 527 F.3d 

1330 (Fed. Cir. 2008) (vacating summary judgment of 

noninfringement); Bancorp Servs., L.L.C. v. Hartford Life 

Ins. Co., 359 F.3d 1367 (Fed. Cir. 2004) (reversing summary judgment of invalidity for indefiniteness). 

As explained in our earlier opinions and in the district 

court’s opinion now on appeal in this case, the patents’ 

specification discloses systems and methods for administering and tracking the value of life insurance policies in 

separate accounts. Separate account policies are issued 

pursuant to Corporate Owned Life Insurance (“COLI”) 
3 BANCORP SERVICES v. SUN LIFE

and Bank Owned Life Insurance (“BOLI”) plans. Under 

separate account COLI and BOLI plans the policy owner 

pays an additional premium beyond that required to fund 

the death benefit, and specifies the types of assets in 

which the additional value is invested. Banks and corporations use the policies to insure the lives of their employees and as a means of funding their employees’ postretirement benefits on a tax-advantaged basis. See Hartford, 359 F.3d at 1369. 

The value of a separate account policy fluctuates with 

the market value of the underlying investment assets. 

That poses a problem from an accounting standpoint, as 

BOLI and COLI plan owners must ordinarily report, on a 

quarter-to-quarter basis, the value of any policies they 

own. Id. The volatility inherent in short-term market 

values has made some banks and companies reluctant to 

purchase these plans. Bancorp Servs., L.L.C. v. Sun Life 

Assurance Co., 771 F. Supp. 2d 1054, 1056 (E.D. Mo. 

2011). Stable value protected investments address that 

problem by providing a mechanism for stabilizing the 

reported value of the policies, wherein a third-party 

guarantor (the “stable value protected writer”) guarantees 

a particular value (the “book value”) of the life insurance 

policy regardless of its market value. To offset the risk to 

a potential guarantor for providing that service, the 

guarantor is paid a fee and restrictions are placed on the 

policyholder’s right to cash in on the policy. Hartford, 359 

F.3d at 1369. As we previously explained, the asserted 

patents “provide[] a computerized means for tracking the 

book value and market value of the policies and calculating the credits representing the amount the stable value 

protected writer must guarantee and pay should the 

policy be paid out prematurely.” Id. 

The asserted patents disclose specific formulae for determining the values required to manage a stable value 
BANCORP SERVICES v. SUN LIFE 4

protected life insurance policy. For example, the specification discloses creating and initializing a fund by performing particular “calculations and comparisons” to 

determine an “initial unit value of the policy.” ’037 patent 

col.12 ll.56–58; see also id. col.11 l.67–col.12 l.57, fig. 11. 

The specification then discloses “processing [that] is 

required at regular intervals to track existing funds.” Id.

col.12 ll.60–61; see also id. col.12 l.59–col.15 l.10, figs. 12–

16. Such processing includes the calculation of “fees” for 

the individuals who manage the life insurance policy. Id.

col.12 l.65–col.13 l.15. That processing also includes the 

computation of values used for determining “surrender 

value protection investment credits,” which, as we previously explained, “means the difference between the actual 

value of a protected investment and the targeted return 

value of that investment at the time the protected life 

insurance policy is surrendered.” Hartford, 359 F.3d at 

1372. Those computations include the concept of a “targeted return,” calculated as follows: 

The Stable Value Protected funds provide an initial targeted return for the first period of an investment. Upon completion of the first period, the 

value of the fund, the “market value,” is compared 

with the “calculated” value of the fund which is 

the “book value.” The “calculated” value of the 

fund is calculated by multiplying the initial value 

of the fund by (1+targeted return), wherein the 

targeted return for the next period is calculated 

using the formula: 

TR=[(MV/BV)(1/D)×(1+YTM)]-1, 

where [TR] is the targeted return, MV is the market value of a fund, BV is the book value of a fund, 

D is the duration of a fund and YTM is the current yield to market. . . . 
5 BANCORP SERVICES v. SUN LIFE

’037 patent col.3 ll.18–30; see also id. col.13 ll.44–53 

(disclosing formulae for calculating a “policy value for the 

present day” and a “policy unit value for the present 

day”). Those computations also include the “duration of a 

fund,” which is calculated according to a formula wellknown in the prior art. Id. col.3 l.28–col.4 l.5. As the 

specification explains, “[u]sing the concepts of duration 

and targeted return, the actual performance of the underlying securities in the fund is smoothed over time.” Id.

col.4 ll.6–8. 

At issue on appeal from the ’792 patent are asserted 

claims 9, 17, 18, 28, and 37. The asserted claims include 

methods and computer-readable media. Claims 9 and 28 

are independent method claims. Claims 9 reads: 

9. A method for managing a life insurance policy 

on behalf of a policy holder, the method comprising the steps of: 

generating a life insurance policy including a stable value protected investment with an initial value based on a 

value of underlying securities; 

calculating fee units for members of a 

management group which manage the 

life insurance policy; 

calculating surrender value protected investment credits for the life insurance 

policy; 

determining an investment value and a 

value of the underlying securities for 

the current day; 

calculating a policy value and a policy unit 

value for the current day; 

storing the policy unit value for the current day; and 

one of the steps of: 
BANCORP SERVICES v. SUN LIFE 6

removing the fee units for members of the 

management group which manage the 

life insurance policy, and 

accumulating fee units on behalf of the 

management group. 

’792 patent col.16 l.55–col.17 l.8. Independent claim 28 

claims “A method for managing a life insurance policy” 

comprising steps that are not materially different from 

the steps of claim 9. Id. col.19 ll.10–22. Claims 17 and 37 

depend from independent claims 9 and 28, respectively, 

and require that the methods steps “are performed by a 

computer.” Id. col.17 ll.60–61; id. col.20 ll.32–33. Claim 

18, the computer-readable medium claim, reads: “A 

computer readable medi[um] for controlling a computer to 

perform the steps” set out in method claim 9. Id. col.17 

l.63–col.18 l.15. 

Before us on appeal from the ’037 patent are asserted 

claims 1, 8, 9, 17–21, 27, 28, 37, 42, 49, 52, 60, 63, 66–68, 

72–77, 81–83, 87, 88, and 91–95. Independent claims 9, 

28, and 52 claim a “method for managing a life insurance 

policy” that is not materially different from the methods 

claimed in the ’792 patent. For example, claim 9 reads: 

9. A method for managing a life insurance policy 

comprising: 

generating a life insurance policy including a stable value protected investment with an initial value based on a 

value of underlying securities of the 

stable value protected investment; 

calculating fees for members of a management group which manage the life 

insurance policy; 
7 BANCORP SERVICES v. SUN LIFE

calculating credits for the stable value 

protected investment of the life insurance policy; 

determining an investment value and a 

value of the underlying securities of 

the stable value protected investment 

for the current day; 

calculating a policy value and a policy unit 

value for the current day; 

storing the policy unit value for the current day; and 

removing a value of the fees for members 

of the management group which manage the life insurance policy. 

’037 patent col.16 ll.31–50. Each independent method 

claim is further limited in a dependent claim requiring 

that the method be “performed by a computer.” Id. claims 

17, 37, 60. Independent claims 18 and 63 are directed to a 

“computer readable medi[um] for controlling a computer 

to perform the steps” set out in the method claims. Claim 

18, for example, recites the same seven steps set forth in 

method claim 9, above. 

Independent claims 1, 19, and 42 of the ’037 patent 

are system claims, which track the content of the aforementioned method and medium claims. For example, 

claim 1 reads: 

1. A life insurance policy management system 

comprising: 

a policy generator for generating a life insurance policy including a stable value 

protected investment with an initial 

value based on a value of underlying 

securities of the stable value protected 

investment; 
BANCORP SERVICES v. SUN LIFE 8

a fee calculator for calculating fees for 

members of a management group 

which manage the life insurance policy; 

a credit calculator for calculating credits 

for the stable value protected investment of the life insurance policy; 

an investment calculator for determining 

an investment value and a value of 

the underlying securities of the stable 

value protected investment for the 

current day; 

a policy calculator for calculating a policy 

value and a policy unit value for the 

current day; 

digital storage for storing the policy unit 

value for the current day; and 

a debitor for removing a value of the fees 

for members of the management 

group which manages the life insurance policy. 

Id. col.15 ll.28–48. 

In 2000, Bancorp sued Sun Life Assurance Company 

of Canada (U.S.) (“Sun Life”) for infringement of the ’792 

patent. In 2002, in a separate patent infringement suit 

filed by Bancorp, the district court invalidated all claims 

of the ’792 patent for indefiniteness. See Bancorp Servs., 

L.L.C. v. Hartford Life Ins. Co., No. 4:00-CV-70, 2002 WL 

32727071 (E.D. Mo. Feb. 13, 2002). Bancorp and Sun Life 

then jointly stipulated to dismiss their case due to collateral estoppel arising from the district court’s invalidity 

ruling in Hartford. The parties further agreed that if the 

district court’s Hartford ruling was reversed on appeal 

then their case would be reinstated. The district court 

entered a judgment of conditional dismissal. 
9 BANCORP SERVICES v. SUN LIFE

In 2004, we reversed the district court’s Hartford ruling. Hartford, 359 F.3d 1367. The district court subsequently vacated its judgment of dismissal in the present 

case. Bancorp Servs., L.L.C. v. Sun Life Assurance Co., 

No. 4:00-CV-1073 (E.D. Mo. July 22, 2004), ECF No. 77. 

In 2009 Bancorp filed an amended complaint adding a 

claim for infringement of the ’037 patent. The parties 

then submitted a joint claim construction and prehearing 

statement addressing numerous disputed claim terms in 

the ’792 and ’037 patents. Before the court construed the 

claims, Sun Life moved for summary judgment of invalidity under § 101 for failure to claim patent-eligible subject 

matter. The court stayed the briefing on Sun Life’s motion pending the Supreme Court’s decision in Bilski v. 

Kappos, 130 S. Ct. 3218 (2010). After Bilski was decided, 

briefing on Sun Life’s summary judgment motion commenced. 

In a memorandum and order dated February 14, 

2011, the district court granted Sun Life’s motion for 

summary judgment of invalidity under § 101. Bancorp, 

771 F. Supp. 2d at 1067. The court first noted its decision 

to determine invalidity under § 101 without addressing 

the parties’ claim construction dispute. Id. at 1059. The 

court then concluded that there was no meaningful distinction between the asserted “process,” “system,” and 

“media” claims, and that each would be analyzed as a 

process claim. Id.; see also id. at 1065. Next, after reviewing Bilski and other opinions, the court concluded that 

“the machine-or-transformation test remains a useful tool 

in determining whether a claim is drawn to an abstract 

idea and thus unpatentable under § 101.” Id. at 1061. 

Applying that test, the court evaluated the particular 

limitations of the asserted claims and found them deficient. On the machine prong, the court noted that the 

specified computer components are no more than objects 
BANCORP SERVICES v. SUN LIFE 10

on which the claimed methods operate, and that the 

central processor is nothing more than a general purpose 

computer programmed in an unspecified manner. Id. at 

1064. Additionally, the court noted that “although it 

would be inefficient to do so, the steps for tracking, reconciling and administering a life insurance policy with a 

stable value component can be completed manually.” Id.

at 1065. On the transformation prong, the court determined that the claims do not effect a transformation, as 

they “do not transform the raw data into anything other 

than more data and are not representations of any physically existing objects.” Id. at 1066. Finally, the court 

analogized the asserted claims to those that the Supreme 

Court found unpatentable in Bilski, Gottschalk v. Benson, 

409 U.S. 63 (1972), and Parker v. Flook, 437 U.S. 584 

(1978), and concluded that the claims were invalid under 

§ 101 as directed to patent-ineligible abstract ideas. 

Bancorp, 771 F. Supp. 2d at 1066–67. 

After considering and denying Bancorp’s motion for 

reconsideration, Bancorp Servs., L.L.C. v. Sun Life Assurance Co., No. 4:00-CV-1073 (E.D. Mo. Apr. 27, 2011), ECF 

No. 408, the court entered final judgment in favor of Sun 

Life. Bancorp timely appealed. We have jurisdiction 

pursuant to 28 U.S.C. § 1295(a)(1). 

DISCUSSION

Summary judgment is appropriate where “there is no 

genuine dispute as to any material fact and the movant is 

entitled to judgment as a matter of law.” Fed. R. Civ. P. 

56(a). We review a district court’s grant of summary 

judgment without deference, reapplying the same standard as the district court and drawing all reasonable 

inferences in favor of the nonmovant. Tokai Corp. v. 

Easton Enters., Inc., 632 F.3d 1358, 1366 (Fed. Cir. 2011). 

We review questions about patent-eligible subject matter 
11 BANCORP SERVICES v. SUN LIFE

under 35 U.S.C. § 101 without deference. Research Corp. 

Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 867 (Fed. 

Cir. 2010). 

I. 

A preliminary question in this appeal involves the 

matter of claim construction. As noted above, the district 

court declined to construe numerous disputed terms prior 

to considering invalidity under § 101. The court stated 

that “[t]here is no requirement that claims construction 

be completed before examining patentability.” Bancorp, 

771 F. Supp. 2d at 1059. After the district court’s decision, we decided Ultramercial, LLC v. Hulu, LLC, in 

which we stated that “[t]his court has never set forth a 

bright line rule requiring district courts to construe 

claims before determining subject matter eligibility.” 657 

F.3d 1323, 1325 (Fed. Cir. 2011), vacated sub nom. WildTangent, Inc. v. Ultramercial, LLC, No. 11-962, 2012 WL 

369157 (U.S. May 21, 2012). For support, we cited Bilski, 

noting that the Supreme Court “f[ound] subject matter 

ineligible for patent protection without claim construction.” Id. Although Ultramercial has since been vacated 

by the Supreme Court, we perceive no flaw in the notion 

that claim construction is not an inviolable prerequisite to 

a validity determination under § 101. We note, however, 

that it will ordinarily be desirable—and often necessary—

to resolve claim construction disputes prior to a § 101 

analysis, for the determination of patent eligibility requires a full understanding of the basic character of the 

claimed subject matter. 

Bancorp argues that we must either (1) vacate and 

remand the district court’s judgment with instructions to 

construe the claims in the first instance; or (2) adopt 

Bancorp’s proposed constructions of the disputed claim 

terms, because, as the nonmovant on summary judgment, 
BANCORP SERVICES v. SUN LIFE 12

it is entitled to all reasonable inferences in its favor. 

Bancorp argues that under its construction each claimed 

“system” requires “one or more computers,” and thus 

those claims cannot constitute abstract ideas. Bancorp, 

while acknowledging that the specific hardware components recited in the system claims are not present in the 

method claims, asserts that a computer is necessary as a 

practical matter to perform the claimed processes on 

account of the “complex and dynamic nature of the invention,” and that the computer amounts to more than insignificant extra-solution activity. Bancorp Br. 52. 

Sun Life responds by arguing that even if we adopt 

Bancorp’s proposed constructions, the claims are not 

patent eligible. Sun Life Br. 38 (“Bancorp argues that the 

Court should apply its constructions. That is fine.” (citation omitted)). According to Sun Life, assuming the 

claims require a computer, that limitation merely 

amounts to insignificant post-solution activity incapable 

of rendering the claimed subject matter patent eligible. 

Sun Life thus contends that the district court correctly 

determined that the asserted claims relate to patentineligible abstract ideas. 

Numerous claim terms were disputed by the parties 

at the district court. For purposes of the § 101 issue on 

appeal, however, the parties’ disagreement boils down to 

whether the claimed systems and methods require a 

computer. Although the district court declined to construe the claims, that does not preclude us from making 

that legal determination on appeal. See Cybor Corp. v. 

FAS Techs., Inc., 138 F.3d 1448, 1455 (Fed. Cir. 1998) (en 

banc) (concluding that claim construction is a pure issue 

of law). Just as a district court may construe the claims 

in a way that neither party advocates, Exxon Chemical 

Patents, Inc. v. Lubrizol Corp., 64 F.3d 1553, 1555 (Fed. 

Cir. 1995) (“[T]he trial judge has an independent obliga-
13 BANCORP SERVICES v. SUN LIFE

tion to determine the meaning of the claims, notwithstanding the views asserted by the adversary parties.”), 

we may depart from the district court and adopt a new 

construction on appeal, Praxair, Inc. v. ATMI, Inc., 543 

F.3d 1306, 1323–24 (Fed. Cir. 2008) (adopting “a new 

claim construction on appeal,” and noting that “the court 

has an independent obligation to construe the terms of a 

patent [and] need not accept the constructions proposed 

by either party”). 

Before proceeding to our § 101 analysis, we construe 

the claims as follows. We conclude that the asserted 

system claims require “one or more computers,” as Bancorp asserts and as Sun Life appears to concede. The 

plain language of the system claims requires particular 

computing devices, such as a “generator,” a “calculator,” 

and “digital storage.” The specification supports our 

construction, explaining that Figure 1, which shows “an 

embodiment of the system of the present invention,” 

depicts a “computer” and “a central processing unit for a 

memory subsystem.” ’037 patent col.6 ll.44–47. 

Regarding the computer-readable medium claims, the 

specification explains that that term refers generally to a 

“high density removable storage means,” id. col.7 ll.66–67, 

such as a “compact disc,” id. col.6 ll.50–51, col.7 l.62. 

Neither party appears to argue that “computer readable 

media” should not carry this plain and ordinary meaning. 

As for the method claims, the parties dispute whether 

the steps require a computer to be performed. In resolving that issue, we must distinguish between the independent and dependent claims. The plain language of the 

independent method claims does not require a computer. 

As noted above, however, each asserted independent 

method claim is further followed by a dependent claim 

requiring that the method be “performed by a computer.” 
BANCORP SERVICES v. SUN LIFE 14

The doctrine of claim differentiation, while not a hard and 

fast rule of construction, creates a presumption that the 

independent method claims do not contain this limitation, 

for “the presence of a dependent claim that adds a particular limitation raises a presumption that the limitation 

in question is not found in the independent claim.” Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 910 (Fed. 

Cir. 2004) (“[W]here the limitation that is sought to be 

‘read into’ an independent claim already appears in a 

dependent claim, the doctrine of claim differentiation is at 

its strongest.”). 

We conclude that the asserted independent method 

claims do not require implementation on a computer. The 

plain language of those claims does not require a computer, and the doctrine of claim differentiation creates a 

presumption that the independent claims, unlike the 

dependent claims, do not require a computer to be implemented. Bancorp fails to rebut that presumption with its 

unpersuasive assertion that a computer is “inherent” in 

the independent method claims. Bancorp Br. 52. As the 

district court observed, “although it would be inefficient to 

do so, the steps for tracking, reconciling and administering a life insurance policy with a stable value component 

can be completed manually.” Bancorp, 771 F. Supp. 2d at 

1065. Unlike the independent claims, however, the 

dependent method claims are plainly limited to being 

“performed by a computer.” 

II. 

We turn now to the issue of patent eligibility. Section 

101 of the Patent Act defines patentable subject matter, 

stating that “[w]hoever invents or discovers any new and 

useful process, machine, manufacture, or composition of 

matter, or any new and useful improvement thereof, may 

obtain a patent therefore, subject to the conditions and 
15 BANCORP SERVICES v. SUN LIFE

requirements of this title.” 35 U.S.C. § 101; see also 35 

U.S.C. § 100(b) (“The term ‘process’ means process, art or 

method, and includes a new use of a known process, 

machine, manufacture, composition of matter, or material.”). From those broad categories, the Supreme Court 

has carved out three exceptions of subject matter ineligible for patent protection: “laws of nature, physical phenomena, and abstract ideas.” Diamond v. Chakrabarty, 

447 U.S. 303, 309 (1980); see also Mayo Collaborative 

Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 

(2012). As the Court has explained, “[p]henomena of 

nature, though just discovered, mental processes, and 

abstract intellectual concepts are not patentable, as they 

are the basic tools of scientific and technological work.” 

Benson, 409 U.S. at 67. “[A] process is not unpatentable 

simply because it contains a law of nature or a mathematical algorithm,” and “an application of a law of nature 

or mathematical formula to a known structure or process 

may well be deserving of patent protection.” Diamond v. 

Diehr, 450 U.S. 175, 187 (1981) (internal quotation marks 

omitted). However, “limiting an abstract idea to one field 

of use or adding token postsolution components d[oes] not 

make the concept patentable.” Bilski, 130 S. Ct. at 3231. 

In other words, a recitation of ineligible subject matter 

does not become patent-eligible merely by adding the 

words “apply it.” See Mayo, 132 S. Ct. at 1294. 

Bancorp argues that its system and medium claims 

cover tangible machines and manufactures and therefore 

cannot be considered patent-ineligible abstract ideas 

under § 101. According to Bancorp, the district court 

ignored the computer and hardware limitations in those 

claims when performing its § 101 analysis. Bancorp 

further contends that its “method” claims are patent 

eligible under our opinions in Research Corp. and Ultramercial (the latter of which the Supreme Court vacated 
BANCORP SERVICES v. SUN LIFE 16

after Bancorp filed its briefs). Bancorp contends that its 

process claims have specific applications to the marketplace and require complex computer programming. 

Bancorp also contends that the district court placed 

improper weight on the machine-or-transformation test, 

which, according to Bancorp, its process claims nonetheless satisfy. 

Sun Life, in response, argues that Bancorp’s asserted 

process claims are unpatentable under Bilski and the 

Supreme Court’s other § 101 opinions. Sun Life asserts 

that the process claims fail the machine-ortransformation test because the claim steps do not require 

a computer to be performed. Even if those claims required a computer, Sun Life contends, the claims are 

unpatentable, because the routine use of a computer to 

perform calculations cannot turn an otherwise ineligible 

mathematical formula or law of nature into patentable 

subject matter. Finally, Sun Life argues that the system 

and medium claims merely paraphrase the unpatentable 

method claims, and as a result they are not patent eligible 

for the same reasons as the method claims. 

A. 

We first address Bancorp’s assertion that the district 

court legally erred by extending the Supreme Court’s 

prohibition against patenting abstract ideas to Bancorp’s 

system and medium claims. In its § 101 analysis, the 

district court perceived no difference between the claimed 

methods, on the one hand, and the claimed systems and 

media, on the other. Rather, the court noted that the 

“specified machines appear to be no more than ‘object[s] 

on which the method operates.’” Bancorp, 771 F. Supp. 2d 

at 1064 (alteration in original) (quoting Graff/Ross Holdings LLP v. Fed. Home Loan Mortg. Corp., No. 07-796, 

2010 WL 6274263, at *5 (D.D.C. Aug. 27, 2010)). Previ-
17 BANCORP SERVICES v. SUN LIFE

ously sitting en banc, we declined in In re Alappat to 

decide whether a claimed apparatus could be unpatentably abstract under § 101. Referring to the abstract-idea 

exception as the “mathematical” exception, we stated: 

“Even if the mathematical subject matter exception to § 

101 does apply to true apparatus claims, the claimed 

subject matter in this case does not fall within that exception.” 33 F.3d 1526, 1542 (Fed. Cir. 1994) (en banc) 

(emphasis added). Subsequently, however, we explained 

in CyberSource Corp. v. Retail Decisions, Inc. that we look 

not just to the type of claim but also “to the underlying 

invention for patent-eligibility purposes.” 654 F.3d 1366, 

1374 (Fed. Cir. 2011). We applied that principle in concluding that a claim directed to a “computer readable 

medium,” despite its format, should be treated no differently from the comparable process claims held to be 

patent ineligible under § 101. Id. at 1375. Most recently, 

in CLS Bank International v. Alice Corp., we held that the 

format of the various method, system, and media claims 

asserted in that case “d[id] not change the patent eligibility analysis under § 101.” No. 2011-1301, 2012 WL 

2708400, at *10 (Fed. Cir. July 9, 2012). 

Thus, under Cybersource and CLS, a machine, system, medium, or the like may in some cases be equivalent 

to an abstract mental process for purposes of patent 

ineligibility. As the Supreme Court has explained, the 

form of the claims should not trump basic issues of patentability. See Flook, 437 U.S. at 593 (advising against a 

rigid reading of § 101 that “would make the determination 

of patentable subject matter depend simply on the 

draftsman’s art”); see also Mayo, 132 S. Ct. at 1294. 

On the facts of this case, we hold that the district 

court correctly treated the asserted system and medium 

claims as no different from the asserted method claims for 

patent eligibility purposes. For example, in the ’037 
BANCORP SERVICES v. SUN LIFE 18

patent, method claim 9 recites a “method for managing a 

life insurance policy comprising” seven steps, whereas 

medium claim 18 recites “a computer readable media [sic] 

for controlling a computer to perform” the same seven 

steps of method claim 9, repeated word for word. Compare ’037 patent col.16 ll.31–48, with id. col.17 ll.33–50. 

There is no material difference between these two categories of claims in the asserted patents. 

The equivalence of the asserted method and system 

claims is also readily apparent. By way of example, we 

compare method claim 9 and system claim 1 of the ’037 

patent. Id. col.15 ll.28–48, col.16 ll.31–48. Claim 9 claims 

a “method for managing a life insurance policy,” whereas 

claim 1 of that patent claims “a life insurance policy 

management system.” Claim 9 includes the step of “generating a life insurance policy,” whereas claim 1 includes 

“a policy generator for generating a life insurance policy.” 

Claim 9 includes the step of “calculating fees,” while claim 

1 including “a fee calculator for calculating fees.” Claim 9 

recites “calculating credits,” while claim 1 recites “a credit 

calculator for calculating credits.” Claim 9 includes 

“storing the policy unit value,” whereas claim 1 includes 

“digital storage for storing the policy unit value.” And so 

on. The only difference between the claims is the form in 

which they were drafted. The district court correctly 

treated the system and method claims at issue in this 

case as equivalent for purposes of patent eligibility under 

§ 101. 

B. 

Turning now to the district court’s ruling on the invalidity of the asserted claims under § 101, we conclude that 

the claims cover no more than abstract ideas and therefore do not recite patent-eligible subject matter. Bancorp’s primary argument boils down to the contention that 
19 BANCORP SERVICES v. SUN LIFE

because its claims are limited to being performed on a 

computer, they cannot claim only an abstract idea. Even 

aside from the fact, explained above, that Bancorp’s 

independent method claims do not require a computer, 

Bancorp’s position is untenable. 

Modern computer technology offers immense capabilities and a broad range of utilities, much of which embodies significant advances that reside firmly in the category 

of patent-eligible subject matter. At its most basic, however, a “computer” is “an automatic electronic device for 

performing mathematical or logical operations.” 3 Oxford 

English Dictionary 640 (2d ed. 1989). As the Supreme 

Court has explained, “[a] digital computer . . . operates on 

data expressed in digits, solving a problem by doing 

arithmetic as a person would do it by head and hand.” 

Benson, 409 U.S. at 65. Indeed, prior to the information 

age, a “computer” was not a machine at all; rather, it was 

a job title: “a person employed to make calculations.” 

Oxford English Dictionary, supra. Those meanings conveniently illustrate the interchangeability of certain 

mental processes and basic digital computation, and help 

explain why the use of a computer in an otherwise patentineligible process for no more than its most basic function—making calculations or computations—fails to 

circumvent the prohibition against patenting abstract 

ideas and mental processes. As we have explained, 

“[s]imply adding a ‘computer aided’ limitation to a claim 

covering an abstract concept, without more, is insufficient 

to render the claim patent eligible.” Dealertrack, Inc. v. 

Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012). 

To salvage an otherwise patent-ineligible process, a 

computer must be integral to the claimed invention, 

facilitating the process in a way that a person making 

calculations or computations could not. See SiRF Tech., 

Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir. 
BANCORP SERVICES v. SUN LIFE 20

2010) (“In order for the addition of a machine to impose a 

meaningful limit on the scope of a claim, it must play a 

significant part in permitting the claimed method to be 

performed, rather than function solely as an obvious 

mechanism for permitting a solution to be achieved more 

quickly, i.e., through the utilization of a computer for 

performing calculations.”). Thus, as we held in Fort 

Properties, Inc. v. American Master Lease LLC, the limitation “using a computer” in an otherwise abstract concept 

did not “‘play a significant part in permitting the claimed 

method to be performed,’” 671 F.3d 1317, 1323 (Fed. Cir. 

2012) (quoting Dealertrack, 674 F.3d at 1333), and thus 

did not “impose meaningful limits on the claim’s scope,” 

id. (quoting CyberSource, 654 F.3d at 1375). The computer required by some of Bancorp’s claims is employed 

only for its most basic function, the performance of repetitive calculations, and as such does not impose meaningful 

limits on the scope of those claims. See Benson, 409 U.S. 

at 67 (invalidating as patent-ineligible claimed processes 

that “can be carried out in existing computers long in use, 

no new machinery being necessary,” and “can also be 

performed without a computer”). 

We agree with the district court that for purposes of 

§ 101 there is no material difference between the claims 

invalidated in Bilski and those at issue here. Bancorp, 

771 F. Supp. 2d at 1066. In Bilski, the patent applicant 

“attempt[ed] to patent the use of the abstract idea of 

hedging risk in the energy market and then instruct[ed] 

the use of well-known random analysis techniques to help 

establish some of the inputs into the equation.” 130 S. Ct. 

at 3231. Here, Bancorp’s patents “attempt to patent the 

use of the abstract idea of [managing a stable value 

protected life insurance policy] and then instruct the use 

of well-known [calculations] to help establish some of the 

inputs into the equation.” Id. As in Bilski, the claims do 
21 BANCORP SERVICES v. SUN LIFE

not effect a transformation, and the fact that the required 

calculations could be performed more efficiently via a 

computer does not materially alter the patent eligibility of 

the claimed subject matter. We discern no fault in the 

conclusion of the district court, Bancorp, 771 F. Supp. 2d 

at 1066, that the asserted claims do not meet either prong 

of the machine-or-transformation test—which, while “not 

the sole test for deciding whether an invention is a patent-eligible ‘process,’” remains “a useful and important 

clue, an investigative tool, for determining whether some 

claimed inventions are processes under § 101,” Bilski, 130 

S. Ct. at 3227. 

The principal precedent relied on by Bancorp in arguing for patent eligibility is Research Corp. In that case, 

the asserted patents claimed processes for enabling a 

computer to render a halftone image of a digital image by 

comparing, pixel by pixel, the digital image against a twodimensional array called a “mask.” 627 F.3d at 863. We 

reversed the district court’s grant of summary judgment 

that the asserted claims were invalid under § 101, concluding that the processes were not “so manifestly” abstract as to override the statutory language of § 101. Id. 

at 868. In so holding, we observed that the claimed 

“invention presents functional and palpable applications 

in the field of computer technology.” Id. We also noted 

that “inventions with specific applications or improvements to technologies in the marketplace are not likely to 

be so abstract” as to be ineligible for patent protection. 

Id. at 869. 

Research Corp. is different from the present case in 

two critical respects. First, the claimed processes in 

Research Corp. plainly represented improvements to 

computer technologies in the marketplace. For example, 

as compared to the prior art, the “inventive mask produce[d] higher quality halftone images while using less 
BANCORP SERVICES v. SUN LIFE 22

processor power and memory space.” Id. at 865. No such 

technological advance is evident in the present invention. 

Rather, the claims merely employ computers to track, 

reconcile, and administer a life insurance policy with a 

stable value component—i.e., the computer simply performs more efficiently what could otherwise be accomplished manually. Bancorp, 771 F. Supp. 2d at 1065. 

Second, the method in Research Corp., which required 

the manipulation of computer data structures (the pixels 

of a digital image and the mask) and the output of a 

modified computer data structure (the halftoned image), 

was dependent upon the computer components required 

to perform it. See CyberSource, 654 F.3d at 1376 (“[T]he 

method [in Research Corp.] could not, as a practical 

matter, be performed entirely in a human’s mind.”). 

Here, in contrast, the computer merely permits one to 

manage a stable value protected life insurance policy 

more efficiently than one could mentally. Using a computer to accelerate an ineligible mental process does not 

make that process patent-eligible. 

Bancorp additionally relies on SiRF, 601 F.3d 1319, 

but that case also does not control the outcome here. In 

SiRF, we evaluated the patent eligibility of a “method for 

calculating an absolute position of a GPS receiver and an 

absolute time of reception of satellite signals.” Id. at 

1331. The GPS receiver, we noted, was “integral to each 

of the claims at issue.” Id. at 1332. Observing that we 

were “not dealing with a situation in which there [wa]s a 

method that [could] be performed without a machine,” 

and that there was “no evidence . . . that the calculations 

[could] be performed entirely in the human mind,” we 

concluded that the claims were eligible for patenting 

under § 101. Id. at 1333. Bancorp seeks to analogize its 

case to SiRF, contending that a computer “plays a significant part” in its claims because they require “precise and 
23 BANCORP SERVICES v. SUN LIFE

repetitive calculation.” Bancorp Br. 52. That misses the 

point. It is the management of the life insurance policy 

that is “integral to each of [Bancorp’s] claims at issue,” 

not the computer machinery that may be used to accomplish it. See SiRF, 601 F.3d at 1332. 

When the insignificant computer-based limitations 

are set aside from those claims that contain such limitations, the question under § 101 reduces to an analysis of 

what additional features remain in the claims. See Mayo, 

132 S. Ct. at 1297 (questioning, after setting aside the 

claimed law of nature, “[w]hat else is there in the claims 

before us?”). The asserted claims require determining 

values—for example, “an initial value based on a value of 

underlying securities,” “fee units,” “surrender value 

protected investment credits,” “an investment value and a 

value of the underlying securities for the current day,” 

and “a policy value and a policy unit value for the current 

day”—and then “storing,” “removing,” and/or “accumulating” some of those values. ’792 patent col.16 l.55–col.17 

l.8. As the formulae in the specification indicate, the 

determination of those values, and their subsequent 

manipulation, is a matter of mere mathematical computation. 

The district court correctly held that without the computer limitations nothing remains in the claims but the 

abstract idea of managing a stable value protected life 

insurance policy by performing calculations and manipulating the results. Bancorp, 771 F. Supp. 2d at 1066. 

Bancorp’s claimed abstract idea impermissibly “preempt[s]” the mathematical concept of managing a stable 

value protected life insurance policy. Benson, 409 U.S. at 

72 (rejecting claims that “would wholly pre-empt the 

mathematical formula and in practical effect would be a 

patent on the algorithm itself”); Flook, 437 U.S. at 594 

(“[The claimed] process is unpatentable under § 101, not 
BANCORP SERVICES v. SUN LIFE 24

because it contains a mathematical algorithm as one 

component, but because once that algorithm is assumed to 

be within the prior art, the application, considered as a 

whole, contains no patentable invention.”). 

Bancorp asserts that its claims are not abstract because they are limited to use in the life insurance market. 

In Bilski the Supreme Court discredited a similar argument, explaining that although some of those claims 

limited the hedging process to use in commodities and 

energy markets, “Flook established that limiting an 

abstract idea to one field of use or adding token postsolution components did not make the concept patentable.” 

130 S. Ct. at 3231. Bancorp further contends that its 

claims cannot be preemptive because Sun Life alleged 

that its stable value protected products do not infringe 

Bancorp’s claims. That argument, while creative, is 

unpersuasive. The Federal Rules permit a party to plead 

in the alternative. See Fed. R. Civ. P. 8(d)(3) (“A party 

may state as many separate claims or defenses as it has, 

regardless of consistency.”). Sun Life’s alternative assertion of noninfringement does not detract from its affirmative defense of invalidity under § 101. 

Finally, our conclusion is not inconsistent with CLS, 

which we decided after hearing oral arguments in this 

appeal. In CLS, we reversed the district court and held 

that method, system, and medium claims directed to a 

specific application of exchanging obligations between 

parties using a computer were patent eligible under § 101. 

No. 2011-1301, 2012 WL 2708400, at *10–11. In faulting 

the district court for “ignoring claim limitations in order 

to abstract a process down to a fundamental truth,” id. at 

*11, we explained that the asserted claims in CLS were 

patent eligible because “it [wa]s difficult to conclude that 

the computer limitations . . . d[id] not play a significant 

part in the performance of the invention or that the 
25 BANCORP SERVICES v. SUN LIFE

claims [we]re not limited to a very specific application of 

the [inventive] concept,” id. at *12 (emphasis added). 

Here, in contrast, the district court evaluated the limitations of the claims as a whole before concluding that they 

were invalid under § 101. Bancorp, 771 F. Supp. 2d at 

1056–57, 1064–66. As we explained above, the computer 

limitations do not play a “significant part” in the performance of the claimed invention. And unlike in CLS, the 

claims here are not directed to a “very specific application” of the inventive concept; as noted, Bancorp seeks to 

broadly claim the unpatentable abstract concept of managing a stable value protected life insurance policy. See

id. at 1066. 

Because Bancorp’s asserted claims are directed to no 

more than a patent-ineligible abstract idea, we affirm the 

district court’s holding of invalidity under § 101. 

CONCLUSION

We have considered Bancorp’s remaining arguments 

and find them unpersuasive. We therefore affirm the 

district court’s judgment that the asserted claims are 

invalid. 

AFFIRMED