This week the U.S. Court of Appeals for the Federal Circuit vacated its prior ruling that a computer-implemented invention must not be declared patent ineligible unless it was “manifestly evident” that the patent claimed an “abstract idea.” The court requested that the parties in CLS Bank International v. Alice Corporation submit briefs on the issue of what test should be adopted to make this determination, which will now be decided en banc by the Federal Circuit. The following analysis briefly explains the patent eligibility standard and why the decision is important for businesses using processes that rely on computer-implemented inventions.

Patent Eligibility

Section 101 of the Patent Act broadly defines patent eligible subject matter as including “any new process, machine, manufacture, or composition of matter … .” Notwithstanding this broad statutory language, the Supreme Court has ruled that certain implicit exceptions apply. In particular, “laws of nature, physical phenomena and abstract ideas" cannot be patented regardless of whether they are nominally claimed to fall within the literal scope of Section 101. For example, neither the law of gravity nor the speed of light would be eligible for a patent under these exceptions, even though both were important and revolutionary discoveries in their time.

The patentability of computer-implemented inventions has often turned on whether a computer configured to execute certain software instructions is a patent-eligible “process” or “machine,” or a patent-ineligible “abstract idea.” As of today, the notion of an “abstract idea” has itself remained abstract and has not been explicitly defined.

What This Means to You

The Federal Circuit is now poised to craft a more definite application of the “abstract idea” test and has requested that the parties brief how the test should be applied. The Federal Circuit has also requested briefing on the issues of whether the presence of a computer in a claim may render an otherwise patent ineligible claim patentable and whether it should matter whether the invention is claimed as method, a system or a storage medium when determining patent eligibility. The Federal Circuit has not solicited briefing on the issue of whether and how other requirements of patentability (e.g., novelty, non-obviousness) relate to the question of patent eligibility under Section 101.

The outcome of this case will affect more than just the computer industry. Many business practices involve computer-implemented inventions. For example, access to content that is provided over a computer network may be regulated, credit applications may be processed over electronic networks, and databases may be created, modified or searched over a computer network. Such operations have been the subject of patents and patent litigation, including appeals that previously applied the “abstract ideas” test. Many businesses protect proprietary business processes through patents while other businesses believe that they are unfairly targeted by patent licensing companies that hold and enforce computer-related patents but do not utilize the inventions themselves.

The opinion that the Federal Circuited vacated set the patent-ineligible hurdle as low as it could go for computer-related inventions. The decision to re-hear the case en banc raises a distinct possibility that the bar will be lifted and that computer-implemented inventions will be subject to more narrow patent protection. Companies that have computer-related patent applications pending or being prepared should review the claims with their patent counsel to ensure that the claims can withstand greater scrutiny than that required under the previous “manifestly evident” standard. Companies that are facing claims of infringement of computer-related patents may also want to consider renewing a defense based on Section 101.