Heated debate over the future of business-related patents in North America continues.  North of the border, innovative businesses await the outcome of argument recently heard by Canada’s Federal Court of Appeal in the Amazon.com appeal, with a decision (and likely an appeal to the Supreme Court of Canada) expected within weeks.  To the  South, a panel of the United States Court of Appeal for the Federal Circuit, which oversees US patent cases, virtually begged guidance from their colleagues – and potentially the US Supreme Court - in determining what is patentable following the US Supreme Court decision in America’s celebrated Bilski case.

In CyberSource Corporation v. Retail Decisions, Inc., No 2009-1358 (August 16, 2011), the US Federal Circuit considered the validity of a pair of claims for fraud monitoring in credit card transactions.  One of the claims baldly recited a method for monitoring fraud, without tying the method to a computer or any other means of automation.  The other claim explicitly recited a physical computer memory (a “computer-readable medium”) configured for execution by a computer processor in order to implement such a method.  Despite what many observers had long seen as an accepted, well-established distinction between the two types of claims, the Court rejected CyberSource’s argument that the second claim was clearly patentable because it was drawn to a tangible, human-made article of manufacture.

“Regardless of what statutory category (‘process, machine, manufacture, or composition of matter,’…) a claim’s language is literally crafted to invoke,” the Court explained, “we look to the underlying invention for patent-eligibility purposes.  Here, it is clear that the invention underlying both claims… is a method for detecting credit card fraud, not a manufacture for storing computer-readable information.”  In doing so, the Court countered what many observers had considered black-letter American law regarding both patentable subject matter and claim interpretation.

The question has been boldly framed: do the plain terms of a claim determine its subject matter, or must the courts look past the plain language of the claim to discern an “underlying invention”?  The Federal Circuit appears to be pushing for broader judicial consideration and consensus in the wake of Bilski, either by means of an en banc decision by the Court as a whole, or further clarification by the Supreme Court.

It is not yet clear how this case will proceed.