Method and system claims covering a computerized trading platform for exchanging financial obligations through a third party intermediary satisfy statutory requirements for patent-eligible subject matter because, considering all limitations, it is not manifestly evident that the claims are directed to a patent ineligible abstract idea.
The accused infringer filed suit seeking a declaratory judgment that the patents, covering a computerized trading platform for exchanging financial obligations through a third party intermediary, were invalid, and the patent holder filed a counterclaim alleging infringement. Ruling on the parties’ cross motions for summary judgment, the district court held the patents invalid for failure to claim patentable subject matter. The Federal Circuit reversed.
On appeal, the patent holder argued that the subject matter of the disputed claims was patent eligible because it is tied to a particular machine or apparatus and not directed to a mere abstract idea. The accused infringer argued that the disputed claims are directed to the unpatentable concept of a two-sided escrow arrangement, and that requiring computer implementation does not impose a meaningful limitation.
The Federal Circuit agreed with the patent holder. While it acknowledged that mere implementation on a computer of an otherwise ineligible abstract idea would not by itself render an invention patent eligible, the court noted that claims drawn to a specific way of doing something with a computer likely are permissible. The majority emphasized that patent eligibility must be evaluated based on all the limitations actually recited, and that the district court improperly reduced the claims to abstract ideas by paraphrasing them in overly simplistic generalities. The court held that, taking all of the claim recitations into consideration, if “it is not manifestly evident that a claim is directed to a patent ineligible abstract idea,” i.e. if it contains any limitations attaching that idea to a specific application, it “must not be deemed for that reason to be inadequate under § 101.” The disputed claims contained limitations requiring that the potentially abstract business concept be applied through a series of specific computer implemented steps, and therefore it was not manifestly evident that the subject matter was patent ineligible.
Writing in dissent, Judge Prost argued that Supreme Court precedent requires inquiry into whether or not claims challenged under § 101 include an inventive concept. In her view, the idea of credit intermediation is clearly abstract and the claims, when stripped of jargon, contain no limitations sufficiently inventive to make the subject matter patent eligible.
A copy of the opinion can be found here.