Missouri District Court Applies Bilski – Invalidates Patented System for Administering and Tracking the Value of Separate-Account Life Insurance Policies

Missouri District Court Applies Bilski – Invalidates Patented System for Administering and Tracking the Value of Separate-Account Life Insurance Policies

Bancorp's patents, 5,926,792 and 7,249,037, described a system for administering and tracking the value of separate-account life insurance policies issued pursuant to Corporate Owned Life Insurance and Bank Owned Life Insurance plans. In challenging these patents, Sun Life asserted that under Bilski v. Kappos, 130 S. Ct. 3218 (U.S. 2010) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], the asserted claims were not drawn to patent-eligible subject matter under § 101 of the Patent Act but instead, sought patent protection for an abstract idea.

In Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Can., 2011 U.S. Dist. LEXIS 14272 (E.D. Mo. Feb. 14, 2011) [enhanced version], the court initially rejected Bancorp's argument that Bilski rejected the machine-or-transformation test for evaluating process claims. The court concluded that the machine-or-transformation test remained a useful tool in determining whether a claim was drawn to an abstract idea and thus unpatentable under § 101.

Applying the machine-or-transformation test, the court refused to tie the patents to a machine, holding that the claims neither referred to a specific machine by reciting structural limitations that narrowed the computer implemented method to something more specific than a general purpose computer nor recited any specific operations performed that would structurally define the computer. Likewise, the court held that the patents did not affect a transformation. In so holding, the court noted that the claims did not transform the raw data into anything other than more data and were not representations of any physically existing objects.

Next, the court asked if the patents sought to protect an abstract idea.  In answering in the affirmative, the court held that the asserted claims were more like those in Bilski (a method for hedging risk), Gottschalk v. Benson, 409 U.S. 63 (U.S. 1972) [enhanced version / unenhanced version] (a method for programming a general-purpose computer to convert binary-coded decimal numerals into pure binary numerals), and Parker v. Flook, 437 U.S. 584 (U.S. 1978) [enhanced version / unenhanced version], (a method for updating alarm limits during catalytic conversion) than those in Diamond v. Diehr, 450 U.S. 175 (U.S. 1981) [enhanced version / unenhanced version] (a method for determining cure time in the process of molding rubber).

 

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