The US Federal Circuit Court of Appeals and US Supreme Court have both issued important decisions this week on the scope of US patent law. Ten (10) judges of the Federal Circuit Court of Appeals wrestled with a question central to hundreds of thousands of business method, financial system and software patents: when does the application of an “abstract idea” using a computer become patentable? For its part, the US Supreme Court was dealing with the highly sensitive subject of the extent of patent protection on genetically modified soy beans, a staple food product.

Curiouser and curiouser! - Alice US Appeals Court for the Federal Circuit splits on the patentability of a computer system.

On Friday, May 10, 2013, the US Court of Appeals for the Federal Circuit released its decision in CLS Bank International and CLS Services Ltd. v. Alice Corporation Pty. Ltd. A highly divided ten (10) judge panel wrote five (5) different sets of reasons on the issue of whether the claimed inventions relating to a computerized trading platform used to mitigate “settlement risk” in financial transactions could be patented. The case had been dismissed on summary judgment before trial. And, on appeal, the Court upheld the decision that none of the claims were patentable, including the method of mitigating risk using an intermediary, the computer readable media on which the computer program for mitigating the risk is stored, or the computer system for implementing the method. A majority – seven (7) to three (3) – agreed with the Court below that the method and media claims were invalid. The Court was evenly split – five (5) to five (5) – on whether the computer system could be patented and so, in the absence of a majority decision to reverse, the summary judgment decision that found the computer system claims invalid was also upheld. Five (5) judges believed that to patent the computer system would be to patent the abstract idea of using a financial intermediary to mitigate settlement risk, and so the claims to the system were invalid. The other five (5) judges disagreed. Four (4) of these five wrote that that the computer system was patentable because it was a particular machine for implementing the method of mitigating risk, not an “abstract idea”, and to find otherwise would “be the death of hundreds of thousands of patents”. The fifth (5th) judge who also would have found the computer system claims valid suggested that if it was made clear in the law that all patents can be used for experimental purposes (even for commercial potential) the debate over what can be patented would fade away. One judge explicitly wrote “This case presents the opportunity for the Supreme Court to distinguish between claims that are and are not directed to patentable subject matter.” We will see if they end up taking that opportunity.

No magic beans! – US Supreme Court finds infringement on farmer Bowman’s replanting of harvested soy beans.

On Monday, May 13, 2013, the US Supreme Court issued its decision in Bowman v. Monsanto. The Court held that it was infringement of Monsanto’s patent on its genetically modified soybean seeds for a farmer to replant soybeans grown from genetically modified seeds. The soy beans had already been harvested and sold to the local grain elevator for consumption. Although an authorized sale of a patented article usually terminates all patent rights in an item, planting the genetically modified soybeans from a previous harvest to take advantage of their pesticide resistant properties without paying additional license fees was an infringement of Monsanto’s patent. If it were not so the Court held, other seed companies could use the harvested soybeans to reproduce Monstano’s patented seeds and deprive Monsanto of its monopoly. The Court expressly stated that their decision on replicating seeds from harvested crops did not apply to other self-replicating products.