Source: https://www.bna.com/different-views-mayo-n12884910624/
Timestamp: 2018-09-21 19:55:37
Document Index: 756421071

Matched Legal Cases: ['§101', '§101', '§101', '§ 101', '§102', '§101', '§101']

Different Views of Mayo on Patent Eligibility Lead to Another 2-1 Federal Circuit Decision | Bloomberg Law
Computerized methods of eliminating risk in bank funds exchanges are patent eligible, according to another split decision on 35 U.S.C. §101 by the U.S. Court of Appeals for the Federal Circuit July 9 (CLS Bank International v. Alice Corporation Pty. Ltd., Fed. Cir., No. 2011-1301, 7/9/12).
Reversing a district court ruling, the majority analyzed the “inventive concept”--a term introduced by the U.S. Supreme Court's recent decision in Mayo v. Prometheus--of the patent claims asserted in this case by looking at the claims as a whole.
The dissent faulted the majority for not specifically identifying the inventive concept. Instead, the dissent translated the steps into “plain English,” reducing the patent to nothing more than financial intermediation.
The majority fought back, accusing the dissent of “ignoring claim limitations in order to abstract a process down to a fundamental truth.”
The panel members agreed, though, that a method claim cannot become patent eligible by the expression of the same underlying abstract idea as a claim on a system or through storage on computer media.
Risk Management System and Method Claims.
Alice Corporation Pty. Ltd. holds four patents (5,970,479; 6,912,510; 7,149,720; and 7,725,375) claiming methods and systems on the formulation and trading of risk management contracts.
No Change After Bilski Ruling.
Assuming claim construction most favorable to Alice, Judge Rosemary M. Collyer concluded that all the asserted claims were not drawn to statutory subject matter under Section 101. She applied the machine-or-transformation test set forth by the Federal Circuit in In re Bilski, 545 F.3d 943, 88 USPQ2d 1385 (Fed. Cir. 2008) (en banc) (212 PTD, 11/3/08).
The U.S. Supreme Court in 2010 determined that the MoT test was a valuable tool but not dispositive of patent eligibility, in Bilski v. Kappos, 130 S. Ct. 3218, 95 USPQ2d 1001 (2010) (124 PTD, 6/30/10).
Nevertheless, in ruling on amended summary judgment motions by the parties after the high court's decision, Collyer again found in favor of CLS (62 PTD, 3/31/11).
She found the method claims directed to an abstract idea; the system claims “represent merely the incarnation of this abstract idea on a computer”; and the media claims “directed to the same abstract concept, despite the fact they nominally recite a different category of invention.”
Alice appealed.
'Abstract' Elusive, Not Preemption, But Foreclosure.
Judge Richard Linn traced the history of the Supreme Court's Section 101 jurisprudence on abstract ideas, beginning in 1853 in O'Reilly v. Morse, 56 U.S. (15 How.) 62 (1853), through Gottschalk v. Benson, 409 U.S. 63, 175 USPQ 673 (1972), and on to Bilski.
However, the court saw little in those decisions or Federal Circuit opinions in defining the term:
The abstractness of the “abstract ideas” test to patent eligibility has become a serious problem, leading to great uncertainty and to the devaluing of inventions of practical utility and economic potential. … Notwithstanding [the courts'] well-intentioned efforts and the great volume of pages in the Federal Reporters treating the abstract ideas exception, the dividing line between inventions that are directed to patent ineligible abstract ideas and those that are not remains elusive. “Put simply, the problem is that no one understands what makes an idea 'abstract.'” Mark A. Lemley et al., Life After Bilski, 63 Stan. L. Rev. 1315, 1316 (2011).
The court sought further clarification in the preemption doctrine, but ultimately relied on the Supreme Court's broader concern for the effect of a patent on future innovation, as stated in Mayo Collaborative Services v. Prometheus Laboratories Inc., 132 S. Ct. 1289, 101 USPQ2d 1961 (2012) (55 PTD, 3/22/12):
Thus, the essential concern is not preemption, per se, but the extent to which preemption results in the foreclosure of innovation. Claims 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. No one can claim the exclusive right to all future inventions.
Abstractness in Computer Implementations.
The court then focused on computer-implemented inventions for Section 101 analysis.
First, the court essentially eliminated use of the Federal Circuit's machine-or-transformation test, described in its Bilski decision, for analyzing computer-related claims.
As a base, the court said, “The mere implementation on a computer of an otherwise ineligible abstract idea will not render the asserted 'invention' patent eligible,” citing Fort Properties Inc. v. American Master Lease LLC, 671 F.3d 1317, 101 USPQ2d 1785 (Fed. Cir. 2012) (38 PTD, 2/28/12), for support.
The court surveyed the results of four Federal Circuit opinions since the Supreme Court's Bilski decision and added the appeals court's 1994 decision in In re Alappat, 33 F.3d 1526, 31 USPQ2d 1545 (Fed. Cir. 1994), but was still without a dispositive standard.
“It can, thus, be appreciated that a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not,” the court said in summarizing those opinions. “But even with that appreciation, great uncertainty remains, and the core of that uncertainty is the meaning of the 'abstract ideas' exception.”
RCT v. Microsoft 'Coarse Filter' Restated.
The court made clear that any claim could be stripped of concrete limitations that ultimately left nothing but an abstract idea, but it is impermissible for a court to do so.
“Patent eligibility must be evaluated based on what the claims recite, not merely on the ideas upon which they are premised,” the court said. “In assessing patent eligibility, a court must consider the asserted claim as a whole,” as taught in Diamond v. Diehr, 450 U.S. 175, 209 USPQ 1 (1981).
The majority finally resolved on a test roughly equivalent to that spelled out in the Federal Circuit's first decision after the Supreme Court's Bilski ruling, Research Corporation Technologies Inc. v. Microsoft Corp., 627 F.3d 859, 97 USPQ2d 1274 (Fed. Cir. 2010)(235 PTD, 12/9/10):
In light of the foregoing, this court holds 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. … 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.
Same Analysis for Method, System, Media Claims.
Turning to the instant case, the court noted that Alice was asserting method, system, and computer media claims all entangled with the same abstract idea--the exchange of obligations between parties using a computer. It laid to rest any idea that the form of the claim would change the patent eligibility analysis under Section 101.
Quoting CyberSource Corp. v. Retail Decisions Inc., 654 F.3d 1366, 99 USPQ2d 1690 (Fed. Cir. 2011) (159 PTD, 8/17/11), the court said, “[T]he basic character of a process claim … is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium.”
Thus, the question in the case boiled down to “whether the asserted claims (method, system, and media) are substantively directed to nothing more than a fundamental truth or disembodied concept without any limitation in the claims tying that idea to a specific application,” the court said.
'Bilski Line' of Cases Distinguished.
To distinguish the claims at issue in the instant case, the majority identified a “Bilski line” of decisions by the Federal Circuit since that 2010 Supreme Court opinion that have held claims to be drawn to abstract ideas:
• online credit card fraud detection in CyberSource;
• an internet-based credit application clearinghouse system in Dealertrack Inc. v. Huber, 674 F.3d 1315, 101 USPQ2d 1325 (Fed. Cir. 2012) (15 PTD, 1/25/12); and
• buying and selling properties without incurring tax liability in Fort Properties.
“Unlike the Bilski line of cases, however, it is difficult to conclude that the computer limitations here do not play a significant part in the performance of the invention or that the claims are not limited to a very specific application of the concept of using an intermediary to help consummate exchanges between parties,” the majority said.
In a 137-word sentence, the court described the “practical application of a business concept” embedded in the claims. Further, a limitations requiring “shadow” records in the application, the majority said, “leave broad room for other methods of using intermediaries to help consummate exchanges, whether with the aid of a computer or otherwise, and, thus, do not appear to preempt much in the way of innovation.”
The court thus reversed the lower court's judgment of patent ineligibility under Section 101, leaving open the question of validity for anticipation, obviousness, and written description.
Again relying on RCT v. Microsoft, the court said, “The comprehensive provisions of 35 U.S.C. §§102, 103, and 112 do the substantive work of disqualifying those patent eligible inventions that are 'not worthy of a patent.' ”
Judge Kathleen M. O'Malley joined the opinion.
Dissent Sees Mayo Differently.
“The majority resists the Supreme Court's unanimous directive to apply the patentable subject matter test with more vigor,” Judge Sharon Prost said in dissent. “Worse yet, it creates an entirely new framework that in effect allows courts to avoid evaluating patent eligibility under §101 whenever they so desire.”
Referring to the majority's ultimate holding, she said that the “ 'manifestly evident' standard is more of an escape hatch than a yardstick.”
Prost said that the Supreme Court's Mayo opinion “hint[ed] (not so tacitly) that our subject matter patentability test is not sufficiently exacting.” And she argued that the decision extended to the “abstract idea” exception to patentability--Mayo addressed the “law of nature” exception--the idea that purely “conventional or obvious” “pre-solution activity” cannot render a claim patent eligible.
She particularly faulted the court for not heeding the Mayo court's instruction, to “inquire whether the asserted claims include an inventive concept.”
“The majority merely posits that the additional limitations in the claims 'can be characterized as being integral to the [invention],' but it does not explain whether they should be characterized as such, and what 'integral' means in the context of §101 in the first place,” Prost said.
She provided a table mapping the recited text in each of the four steps of a representative claim to its “plain English” equivalent, each representing actions of typical financial intermediation. “So where is the invention?,” she asked.
“What is it that sets Benson, Bilski, and Prometheus--and Dealertrack--apart from this case,” Prost asked further, “and what legal principle justifies responding to a unanimous Supreme Court decision against patentability with even a stricter subject matter standard?”
Prost took a slightly different path, but ultimately came to the same conclusion as the majority, however, on the patent eligibility of the system and computer medium claims. She characterized the system claims as including non-inventive computer-related functions, and guided by Mayo, said, “we must look beyond the non-inventive aspect of the claims and ask whether the remaining portion is an abstract idea.”
She determined that the instant system and computer medium claims were also ineligible for patenting accordingly.
Steven J. Glassman of Kaye Scholer, New York, represented CLS. Adam L. Perlman of Williams & Connolly, Washington, D.C., represented Alice.
Opinion at http://pub.bna.com/ptcj/111301Jul9.pdf