In a 2-1 split decision in CLS Bank v. Alice Corporation, the Federal Circuit heldon July 9 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 an abstract idea under 35 U.S.C. § 101. In other words, “[u]nless 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’ . . . .”
CLS Bank v. Alice Corporation presented, once again, the question of patent eligibility of an invention implemented by computers. The claims at issue (method, system, and media claims) were directed generally to the exchange of obligations between parties using a computer. The asserted system and media claims explicitly recited “machine” limitations – e.g., “a data processing system”, “a data storage unit”, “a computer”, or “a computer program product comprising a computer readable storage medium having computer readable program code embodied in the medium.” Some of the asserted method claims explicitly recited an “electronic adjustment” limitation, which the parties agreed required the use of a computer. And although the remaining asserted method claims did not contain the “electronic adjustment” limitation, they did contain the same “shadow credit record” and “shadow debit record” limitations as the asserted method claims containing the “electronic adjustment” limitation. The specifications of the asserted patents supported the understanding that the shadow debit/credit record limitations required computer implementation.
On summary judgment, the district court first analyzed the method claims under the machine-or-transformation test. The district court interpreted the shadow credit and debit records limitations to require electronic implementation and a computer. However, after looking at the claims and the specifications of the patents, the district court concluded that the “‘nominal recitation of a general-purpose computer in a method claim does not tie the claim to a particular machine or apparatus . . . .’” The district court also analyzed the method claims under the abstract idea exception. The court held the method claims to be invalid under § 101 as directed to the “‘fundamental idea of employing a neutral intermediary to ensure that parties to an exchange can honor a proposed transaction, to consummate the exchange simultaneously to minimize the risk that one party does not gain the fruits of the exchange, and then irrevocably to direct the parties, or their value holders, to adjust their accounts or records to reflect the concluded transaction.’” As to the system and media claims, the district court concluded that the system claims “‘represent merely the incarnation of this abstract idea on a computer, without any further exposition or meaningful limitation[,]’” and that the media claims “‘are also directed to the same abstract concept . . . .’”
The Federal Circuit reversed the district court’s decision. The Court, before reversing, explained that the mere implementation on a computer of an otherwise ineligible abstract idea will not render the asserted “invention” patent eligible. On the other hand, according to the Court:
where the ‘addition of a machine impose[s] a meaningful limit on the scope of a claim,’ and ‘play[s] a significant part in permitting the claimed method to be performed, rather than function[ing] 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,’ that machine limitation renders the method patent eligible.
The Federal Circuit further expounded that “[n]othing in the Supreme Court’s precedent, nor in ours, allows a court to go hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patentee actually claims. It is fundamentally improper to paraphrase a claim in overly simplistic generalities in assessing whether the claim falls under the limited ‘abstract ideas’ exception to patent eligibility under 35 U.S.C. § 101.”
To correctly apply its new standard, the Court explained that its analysis in the CLS Bank case must consider 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. According to the Federal Circuit, the district court looked past the details of the claims in characterizing them as being directed to a fundamental concept or truth. This was error. As the Federal Circuit reiterated, ignoring claim limitations in order to abstract a process down to a fundamental truth is legally impermissible.
Thus, the Federal Circuit, upon looking at all the claim limitations, found that, unlike the Bilski line of cases (Bilski, Cybersource, Dealertrack, and Fort Properties), it was difficult to conclude that the computer limitations in CLS Bank did not play a significant part in the performance of the invention or that the claims were not limited to a very specific application of the concept of using an intermediary to help consummate exchanges between parties. “The limitations of the claims as a whole, not just the computer implementation standing alone, are what place meaningful boundaries on the meaning of the claims in this case.”
Accordingly, “[w]hile the use of a machine in these limitations is less substantial or limiting than the industrial uses examined in Diehr (curing rubber) or Alappat (a rasterizer), the presence of these limitations prevents us from finding it manifestly evident that the claims are patent ineligible under § 101. In such circumstances, we must leave the question of validity to the other provisions of Title 35.”