CLS Bank International v. Alice Corp., Fed. Cir., No. 2011-1301, en banc rehearing granted 10/9/12. ns-orders/2011-1301%20order.pdf

The Federal Circuit agreed to an en banc rehearing of CLS Bank for purposes of clarifying the issue of patent eligibility under 35 U.S.C. §101 of method, system, and medium claims implemented on a computer. The order vacates the earlier split panel decision finding the invention patent eligible (CLS Bank International v. Alice Corporation PTY, LTD (Fed. Cir. 2012).

The court appears set to consider three questions that were at the heart of the conflicting panel decisions:

  1. What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible “abstract idea”;
  2. When, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea; and
  3. Should it matter, for purposes of assessing patent eligibility of a computer-implemented invention under 35 U.S.C. §101, whether the invention is claimed as a method, system, or storage medium, i.e., should such claims be considered equivalent for §101 purposes?

It’s not surprising that the task of defining a workable “abstract idea” test is at the top of the list. In several post-Bilski cases on patent eligibility of computer-aided business methods, including CLS Bank, the Federal Circuit has struggled with the meaning of “abstract idea” as applied to business methods. (Fort Props. Inc. v. Am. Master Lease LLC, 671 F.3d 1317, 1322 (Fed. Cir. 2011); Dealertrack Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012); and Bancorp Services, LLC v. Sun Life Assurance Company of CA (Fed. Cir. 2012). The court in CLS Bank, for example, admitted that “the dividing line between inventions that are directed to patent ineligible abstract ideas and those that are not remains elusive.”

However, one of the court’s post-Bilski cases offers a more workable approach. In CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011) the court disqualified the computer-aided business method at issue because “it is drawn to an unpatentable mental process—a subcategory of unpatentable abstract ideas.” Whether one considers “mental processes” a separate category of patent ineligible processes, as earlier Supreme Court cases have (see, for example, Gottschalk v. Benson, 409 U.S. 63, 67 (1972)), or a subcategory of “abstract ideas,” it is hard to argue with the result: It is much easier to determine whether a method can be carried out by mental processes alone—an analysis that takes advantage of our everyday experiences with problem solving—than whether or not a claimed method should be disqualified as an “abstract idea.” (The business methods in both CLS Bank and Bilski, for example, are easily disqualified as mental processes, but not so convincingly dismissed as “abstract ideas.”)

The mental-processes exclusion should be seen as a useful complement to the “abstract-idea” exclusion. Where the invention cannot be carried out by mental processes alone—for example, because the method is computationally intensive—the §101 analysis will require a second-level inquiry to determine whether the claimed invention “performs a function that the patent laws were designed to protect” (Diamond v. Diehr 450 U.S. 175 (1981)). Nonetheless, the “mental processes” exclusion would appear to be an efficient first-level inquiry for disqualifying computer-aided methods without having to determine whether the invention should be disqualified as an “abstract-idea.”