On May 10, 2013, the Federal Circuit, sitting en banc,1
issued a per curiam decision in CLS Bank International v. Alice Corporation Pty. Ltd.,
No. 2011-1301 [an enhanced version of this opinion is available to lexis.com
subscribers], affirming that the asserted method, computer-readable
media, and system claims are not directed to eligible subject matter under 35
U.S.C. §101. Although the ultimate holding by the court was limited, voluminous
concurring and dissenting opinions issued with the per curiam decision reveal a
serious and deep divide over what claims are patent-eligible and what the test
for patent eligibility should be for computer-related claims.
The appeal arose from a grant of summary judgment from
the United States District Court for the District of Columbia that the asserted
claims of Alice Corporation's (Alice) patents were invalid for failing to claim
patent-eligible subject matter, CLS Bank Int'l v. Alice Corp., 768 F.
Supp. 2d 221 (D.D.C. 2011) [enhanced version]. A summary of the oral hearing and
brief history of the case can be found here.
The 58-word holding concluded that the asserted method,
computer-readable media, and system claims were not directed to eligible
subject matter under 35 U.S.C. §101. However, as noted by Chief Judge Rader,
"though much is published today discussing the proper approach to the patent
eligibility inquiry, nothing said today beyond our judgment has the weight of
precedent." For the moment, the decision in CLS Bank is limited only to affirming the invalidity
of the asserted claims. Given the split in the Federal Circuit regarding the
eligibility of the computer-implemented claims, further clarity will likely be
needed from the Supreme Court.
The Breakdown of the En Banc Decision
The per curiam opinion noted that a majority of the
court, Judges Lourie, Dyk, Prost, Reyna, Wallach, Rader, and Moore, affirmed
that the asserted method claims and computer-readable media claims are not
directed to patent-eligible subject matter under 35 U.S.C. §101. Only five of
the 10 judges sitting en banc, Judges Lourie, Dyk, Prost, Reyna, and Wallach,
affirmed that the asserted system claims are not directed to patent-eligible
subject matter. Judges Rader and Moore would find that only the system claims
recite patent-eligible subject matter, while Judges Linn, O'Malley, and Newman
would conclude that all claims recite patent-eligible subject matter. Because
no single opinion garnered a majority of the judges, only the final judgment is
precedential. However, the concurring and dissenting opinions shed light on the
thinking of the various judges of the Federal Circuit regarding the operation
of §101 for patent-eligibility.
Judge Lourie's Concurrence - Focusing on the
"Abstract Idea" Exception
Judge Lourie's concurring opinion, joined by Judges Dyk,
Prost, Reyna, and Wallach, focused on the judicially created "abstract idea"
exception to patent-eligibility under 35 U.S.C. §101. In particular, Judge
Lourie noted that the "animating concern is that claims should not be
coextensive with a natural law, natural phenomenon, or abstract idea; a
patent-eligible claim must include one or more substantive limitations that, in
the words of the Supreme Court, add 'significantly more' to the basic
principle, with the result that the claim covers significantly less." (emphasis
in the original). For claims that appear to pose a risk of preempting an
abstract idea, the initial step, according to the concurrence, is to define the
fundamental concept that is "wrapped up in the claim." Once the applicable
abstract idea is identified, "the balance of the claim can be evaluated to
determine whether it contains additional substantive limitations that narrow,
confine, or otherwise tie down the claims so that, in practical terms, it does
not cover the full abstract idea itself." Utilizing the Supreme Court's
decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
132 S. Ct. 1289 (2012) [enhanced version], the concurrence reasoned that, if
the steps or other limitations added to the identified abstract idea only
include insignificant, conventional, or routine steps or limitations, then the
claim still effectively covers the abstract idea itself and does not contain
patent-eligible subject matter.
In applying the abstract idea exception to the claims at
issue, the concurrence identified the abstract concept at issue to be reducing
settlement risk by facilitating a trade through third-party intermediation.
After considering the additional limitations, Judge Lourie concluded that none
of the method claims recited "significantly more" than the underlying abstract
The concurring opinion then considered the
computer-readable medium and system claims, and concluded that those claims
likewise fail to recite patent-eligible subject matter. The opinion stated that
it is necessary to look past "drafting formalities" and let the "true substance
of the claims" guide the analysis. Under this approach, the concurrence
concluded that none of the system or medium claims offered meaningful
limitations, and determined that "[a]bstract methods do not become
patent-eligible machines by being clothed in computer language."
Chief Judge Rader - Concurring-in-Part and
The opinion authored by Chief Judge Rader took a
different perspective regarding the use of a computer with an abstract idea,
emphasizing that it is necessary to analyze each asserted claim as a whole. In
particular, "where the claim is tied to a computer in such a way that the
computer plays a meaningful role in the performance of the claimed invention,
and the claim does not pre-empt virtually all uses of an underlying abstract
idea, the claim is patentable." In distinguishing Judge Lourie's concurrence,
Chief Judge Rader resolved that the "inventiveness" referenced in Prometheus
only required that the additional limitations recited in a claim not be
inherently required by the abstract idea.
Initially addressing the system claims, Chief Judge Rader
concluded that the claims recited patent-eligible subject matter in view of the
detailed algorithms of the specification and the specific hardware components
recited in the claim language. Chief Judge Rader cautioned that "[l]abeling
this system claim an 'abstract concept' wrenches all meaning from those words,
and turns a narrow exception into one which may swallow the expansive rule (and
with it much of the investment and innovation in software)."
Chief Judge Rader, joined by Judge Moore, however,
concluded that the method claims are not patent-eligible. According to Chief
Judge Rader, the method claims as a whole only recite general steps that would
be inherent within the concept of an escrow using a third-party intermediary.
Thus, Judge Rader and Judge Moore agreed with Judge Lourie as to these claims
in result, but for different reasons.
The Additional Opinions of Judges Moore,
Newman, Linn, and O'Malley and "Additional Reflections" by Chief Judge Rader
Judge Moore filed an additional dissenting-in-part
opinion to specifically address the system claims at issue. As succinctly noted
by Judge Moore, the potential ramifications that could result following the
analysis of the concurrence could be quite drastic: "if all of these claims,
including the system claims, are not patent-eligible, this case is the death of
hundreds of thousands of patents." Regarding the system claims, Judge Moore's
stated that, "[l]ooking at [the] hardware and software elements [of the system
claim], it is impossible to conclude that this claim is merely an abstract
Judge Newman's opinion focused on the experimental use of
patented information. By clarifying the right to experiment on information
disclosed in patents, it would not be necessary to determine whether the
information of the patent was an abstract idea. According to Judge Newman,
"when subject matter is within the statutory classes in section 101,
eligibility is established."
Judges Linn and O'Malley filed an opinion concluding that
all the claims contain patent-eligible subject matter, including the method and
computer-readable media claims, because the district court construed those
claims to include all the computer-implemented limitations of the system
Finally, Chief Judge Rader submitted additional
reflections in which he strongly cautioned against inserting the concept of "inventiveness"
into the statutory concept of subject matter patent eligibility. Chief Judge
Rader emphasized that when faced with conflicting precedent, courts should
consult the statute, which broadly defines patent-eligible subject matter.
Predicting the practical implications of a fractured
decision can be difficult. Because the per curiam opinion is limited to
affirming the district court's decision regarding the invalidity of the
asserted method, computer-readable media, and system claims, the Federal
Circuit's decision does not provide clear guidance to district courts as to the
proper "test" to apply when faced with a patent eligibility challenge to
patents drawn to computer-related inventions.
However, the additional opinions reveal a serious divide
over what claims are patent-eligible and what the test for patent eligibility
should be for computer-related claims. In particular, the additional opinions
reveal that a clear majority of the Federal Circuit would likely affirm a
judgment of invalidity of method and computer-readable media claims lacking any
additional limitations beyond those required to perform the concept underlying
the claim. The Federal Circuit thus appears to be split between judges who
appear to favor a broad § 101 standard with a narrow "abstract idea" exception
versus those who appear to favor a broader "abstract idea" exception to exclude
claims that preempt the use of the abstract concept. It seems likely that
further review by the U.S. Supreme Court may be warranted to clarify the scope
of the "abstract idea" exception for computer-implemented inventions.
Given the potential impact that a final decision
regarding the patent eligibility of computer-related inventions may have on
thousands of issued patents and pending patent applications, the future
progress of this case will likely be monitored and highly scrutinized should a
petition for writ of certiorari be filed with the Supreme Court.
1 Senior Judge Linn joined
nine of the judges of the Federal Circuit; Circuit Judge Taranto did not
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