On July 26, 2012, a panel of the U.S. Court of Appeals for the Federal Circuit (Lourie, Prost and Wallach) held that 35 U.S.C. § 101 precludes one from obtaining a patent on a computer-implemented abstract process where the computer does not play a “significant part” in the performance of the claimed invention; that is, where the computer “simply performs more efficiently what could otherwise be accomplished manually.” This ruling affirmed the district court’s decision on summary judgment that had invalidated two patents owned by Bancorp Services, L.L.C. (“Bancorp”).

Background

In 2000, Bancorp sued Sun Life Assurance Company of Canada (U.S.) (“Sun Life”) for patent infringement. On February 14, 2011, the U.S. District Court for the Eastern District of Missouri granted Sun Life’s motion for summary judgment of invalidity under § 101. Bancorp Servs., L.L.C. v. Sun Life Assurance Co., 771 F. Supp. 2d 1054 (E.D. Mo. 2011). Bancorp had alleged infringement of two patents directed to systems, methods, and media for managing life insurance policies. The asserted claims involve a series of steps for tracking, reconciling and administering a life insurance policy with a stable value component.

The district court held that the patents failed to meet the “machine-ortransformation” test (assessing whether an abstract process is implemented on a particular machine, or transforms an article from one thing or state to another). The district court found that the recited computer components were not necessary for carrying out the patented process: “although it would be inefficient to do so, the steps for tracking, reconciling and administering a life insurance policy with a stable value component can be completed manually.” Id. at 1065. The district court also found that the claims “do not transform the raw data into anything other than more data and are not representations of any physically existing objects.” Id. at 1066.

The Decision

Judge Lourie, joined by Judges Prost and Wallach, delivered the opinion of the Court. Bancorp’s principal argument relied on two recent Federal Circuit decisions, Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010) and CLS Bank International v. Alice Corp., No. 2011-1301, 2012 WL 2708400 (Fed. Cir. July 9, 2012), which had held that an abstraction must be “manifestly evident” to hold a patent ineligible under § 101.

Research Corp. involved a patent that claimed a process for enabling a computer to render a halftone image of a digital image by comparing, pixel by pixel, the digital image against a two-dimensional array. In that case, summary judgment of invalidity under § 101 was reversed because, inter alia, “the invention presents functional and palpable applications in the field of computer technology.” Id. at 868.

CLS Bank involved patent claims for reducing settlement risk in computerized trading platforms. In the opinion in that case, which issued only seventeen days before, a different panel (Linn, O’Malley, with Prost dissenting) reversed a summary judgment of invalidity under § 101 because, inter alia, the computer limitations played “a significant part in the performance of the invention” and the claims were “limited to a very specific application of the [inventive] concept.” Id. at *11-12.

Here, the Federal Circuit affirmed the district court and found that the patented process failed the “manifestly evident” standard. In distinguishing the prior decisions, the court emphasized that (1) Bancorp’s process did not represent an improvement to computer technologies in the marketplace; and (2) the computer increased efficiency but was not necessary to perform the process: “[u]sing a computer to accelerate an ineligible mental process does not make that process patent-eligible.”