An Eligible Patent? It’s a Divisive Issue

Despite recent Supreme Court authority on the issue, a judgment of the US Federal Circuit handed down on 9 July 2012 reveals that the test for patent eligibility is far from settled in the United States.

We previously posted about the US Supreme Court’s March decision in Mayo Collaborative Services v Prometheus Laboratories Inc No 10-1150, in which the Court unanimously held that under s 101 of the Patent Act an “abstract idea” is not patentable unless the idea is applied to a known structure or process in a way that adds inventiveness to the abstract idea.  The Supreme Court was concerned that if a person could patent an abstract idea, then others would be prevented from using or relying on basic processes of nature.  A common example is the law of gravitation: if Newton had patented his scientific findings then potentially any invention relying on the laws of gravity would have been infringing his patent. 

You would be excused for thinking that the Supreme Court’s 9-0 decision in Prometheus settled the question of how to determine patent eligible subject matter.  However, in CLS Bank v Alice Corp (Fed Circ, No 11-1301), handed down on 9 July, the Federal Court remained divided in its approach.

The patents before the Federal Court related to a computerized trading program in which parties could enter their obligations and form settlements without the risk of one party reneging.

The District Court found that the claims of the patent were not patent eligible because they related to nothing more than an abstract idea being implemented via a computer.  A divided Federal Court reversed that decision on appeal.

The majority expressed deep dissatisfaction with the state of applicable law on the patent eligibility of an “abstract idea”.  It was previously thought that a patent setting out a specific way of doing something with a computer was likely to be patent eligible, whereas a claim to nothing more than the idea of doing that thing on a computer may not.  The majority stated that such a rule was too uncertain.

The majority held that a claim should not be deemed ineligible unless, taking all of the claims of the patent into account, it is “manifestly evident” that a claim is directed to a patent ineligible, abstract idea.  As a result, the majority found that claims before the Court were patent eligible. 

In a fierce dissent, Judge Prost alleged that the majority failed to follow the Supreme Court’s ruling in Prometheus.  Her Honour stated:

“The majority resists the Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor.  Worse yet, it creates an entirely new framework that in effect allows courts to avoid evaluating patent eligibility under s 101 whenever they so desire.”

Judge Prost concluded that the patent claims constituted “abstract ideas repackaged as methods and systems” and as such were not patent eligible.

If the majority opinion in CLS Bank v Alice Corp, (Fed Circ, No 11-1301) is followed by other courts, it will be extremely difficult to establish that an invention which is implemented using a computer program is not patent eligible subject matter.  Some argue that this will stifle development and innovation by giving exclusive rights over natural processes and ideas.  Others argue that invalidating patents for ineligibility will deter investment into innovation in the first instance.  Given the impassioned division between judges on the Federal Court, and the question which remains about whether the majority followed the Supreme Court’s approach, there is no doubt that the debate will continue.