[author: Rasmussen, W. Brent]
The topic of what constitutes patentable subject matter under section 101 of the Patent Act has received a lot of attention leading up to and following the Supreme Court's decision in Bilski v. Kappos, 130 S. Ct. 3218 (2010). More recently, in Mayo Collaborative Services v. Prometheus Laboratories, Inc., the Supreme Court revisited the issue. 132 S. Ct. 1289 (2012). Reversing the Federal Circuit, the Supreme Court held that Prometheus' invention for a personalized medicine dosing process constituted unpatentable subject matter, because it applied a natural process (which is never patentable) using known elements. This was the second time in the last three terms that the Supreme Court reversed the Federal Circuit in a section 101, patentable subject matter case.
On July 9, 2012, in its first section 101 decision post Prometheus, a majority panel for the Federal Circuit found that an invention claiming the computerized use of an intermediary in a financial transaction to eliminate "settlement risk" (i.e. the risk that only one party will pay its obligation) was patent eligible. CLS Bank v. Alice Corp. (No. 2011-1301). The district court had previously granted CLS Bank's motion for summary judgment of invalidity on the grounds that the asserted claims, which were all directed to the use of this credit intermediary, recited an abstract idea and were thus patent ineligible. In reversing the district court, the majority panel held:
Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible "abstract idea" under [section 101].
Slip Op. at 20-21 (emphasis added).
The dissent observed that this holding represented a "new approach" to the question of patentable subject matter, one that "resists the Supreme Court's unanimous directive [following Prometheus] to apply the patentable subject matter test with more vigor." Dissent at 1, 3.
In the analysis that followed, the majority and dissent demonstrated a fundamental disagreement over how to determine whether an invention falls under the "abstract idea" exception to patent eligibility. The majority adopted a strict approach as it related to claim interpretation, observing that "[a]ny claim can be stripped down . . . [to] an abstract idea." Slip Op. at 19. The dissent, on the other hand, broke the claims down into plain English and asked whether the claims recited an "inventive concept," as purportedly required by Prometheus. Dissent at 3, 5 ("Now there is no doubt that to be patent eligible under § 101, the claims must include an 'inventive concept.") (citing Prometheus, 132 S. Ct. at 1294).
The majority found that the asserted claims were patent eligible because they covered the application of an abstract idea (i.e. the use of a credit intermediary) in a specific way. Slip Op. at 26. Of particular note to the majority were the limitations that recited the use of "shadow accounts" by a supervisory institution to help parties settle an obligation. Slip Op. at 27. The dissent disagreed, finding that the "shadow accounts" limitations were essentially directed to the basic idea of setting up a debit and credit account for each party. Dissent at 5. Like the claim limitations in Prometheus, this was not inventive and certainly not enough to transform an abstract idea into a patentable one. Dissent at 6.
Given the sharp disagreement among the panel members and the apparent tension between the majority's decision and Prometheus, it will not be surprising to see the Federal Circuit revisit the case en banc or for the Supreme Court to be given the chance to clarify once more the standard for patent eligibility under section 101.