Federal Circuit Fails to Set Clear Standard for Patent Eligibility

by Morgan Lewis
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In an opinion that was poised to set a single standard governing the patent eligibility of computer-implemented inventions, no majority is reached.

After months of discussion and anticipation, the U.S. Court of Appeals for the Federal Circuit on May 10 issued its decision in CLS Bank Int'l v. Alice Corp. Pty. Ltd.,[1] affirming the judgment of the U.S. District Court for the District of Columbia that the claims in question were not patent-eligible subject matter under 35 U.S.C. § 101. The per curiam decision consists of a single paragraph followed by six separate opinions covering 135 pages written by different groups of judges. As Chief Judge Randall Rader observed in a footnote, not one of the six opinions was joined by a majority of the court and, thus, "nothing said today beyond our judgment has the weight of precedent." Accordingly, the law of patent eligibility is no clearer now than it was before CLS Bank was decided.

Background

Over the last several years, judges around the country—including, on more than one occasion, the justices of the U.S. Supreme Court—have struggled to define clear boundaries for what types of inventions are eligible for patent protection under 35 U.S.C. § 101. In no area has the confusion been more pronounced than in the field of computer-implemented inventions, more commonly referred to as "software patents." Even within the Federal Circuit, there seems to exist a deep divide between different factions of the court concerning the extent to which software is patent-eligible subject matter.

In October 2012, the Federal Circuit agreed to consider en banc the case of CLS Bank to decide the following question: "What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible 'abstract idea'; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?" Thus, it appeared that the court was poised to finally set a single standard governing the patent eligibility of computer-implemented inventions. Unfortunately, it was not to be.

Court Opinions in CLS Bank

There are several observations that can be made about the court's various opinions in CLS Bank:

  • One group of five judges, led by Judge Alan Lourie, took a narrow view of patent eligibility for software and would have found all of the disputed claims ineligible under section 101.
  • Another group of four judges, led by Chief Judge Rader, took a much broader view and would have upheld the patent eligibility of the "system" claims in the asserted patent, although not necessarily the claims directed to methods or "computer readable media."
  • Judge Pauline Newman disagreed with all of the other opinions and (along with Judges Richard Linn and Kathleen O'Malley) would have held all of the claims to be patent eligible.
  • Eight of the 10 judges (all but Chief Judge Rader and Judge Kimberly Moore) agreed that all of the disputed claims should rise or fall together, regardless of whether they are drafted to cover methods, systems, or something else.

Beyond those broad generalizations, very little can be said with certainty about the state of the law in this area. Judge Newman may have summed it up best when she observed that the judges "propounded at least three incompatible standards, devoid of consensus, serving simply to add to the unreliability and cost of the system of patents as an incentive for innovation."

It should be noted that this judicial deadlock might be resolved the next time the issue comes before the Federal Circuit, as newly confirmed Judge Richard Taranto did not participate in the decision and two nominations for open seats on the bench are still pending. Once the court is up to its full complement of 13 judges, it is possible that a majority position might emerge.

Unfortunately, until that happens, patent applicants and litigants will have to continue doing their best to take positions and develop strategies that will hold up regardless of the controlling test that is ultimately adopted.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis attorneys:

Houston
C. Erik Hawes
David J. Levy

Palo Alto
Robert Beyers
Dion M. Bregman
Douglas J. Crisman
Andrew J. Gray IV
Michael J. Lyons

Philadelphia
John V. Gorman
Eric Kraeutler

San Francisco
Daniel Johnson, Jr.
Brett A. Lovejoy, Ph.D.
Brett M. Schuman

Washington, D.C.
J. Kevin Fee


[1]. CLS Bank Int'l v. Alice Corp. Pty. Ltd., No. 2011-1301 (Fed. Cir. May 10, 2013), available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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