Recent Developments In Information Technology Law – Second Quarter 2014

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U.S. SUPREME COURT -

Patents -

As reported at U.S., No. 13-298, on June 19, 2014, a unanimous Supreme Court ruled that the method, system and readable media claims of a patent were drawn to patent ineligible subject matter under 35 U.S.C. § 101. The patent is directed to a computerized trading platform for exchanging obligations where “settlement risk” is eliminated by using a trusted third party to settle the obligations between the first and second parties. Justice Thomas followed the analysis set out in Mayo Collaborative Services v. Prometheus Laboratories, Inc., asking: (1) whether the claims at issue are directed to a patent ineligible concept; and (2) whether the claims’ elements, considered both individually and as an ordered combination, transform the nature of the claim into a patent-eligible application. On the first question, the Court concluded that the claims in this case for a method of mitigating settlement risk with an intermediary is just as ineligible as the method claims to the abstract idea of hedging risks struck down in Bilski v. Kappos. On the second question, the Court found that the abstract idea claim does not contain an inventive concept that transforms it into a patent eligible claim. The introduction of a computer into the claims does not alter the analysis, according to Justice Thomas, citing the Court’s decisions in Gottschalk v. Benson, Parker v. Flook, and Diamond v. Diehr. These cases show that mere recitation of a generic computer will not transform a patent ineligible abstract idea into a patent-eligible invention. Despite the claims recitation of “specific hardware,” that hardware consists of “purely functional and generic” components included in nearly every computer. Thus, none of the hardware recited “offers a meaningful limitation beyond generally linking ‘the use of the [method] to a particular technological environment,’ that is, implementation via computers.” Viewed as a whole, these method claims simply recite the concept of intermediated settlement as performed by a generic computer. They do not, for example, purport to improve the functioning of the computer itself or effect an improvement in any other technology or technical field. An instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer is not “enough” to transform the abstract idea into a patent-eligible invention. Alice Corporation Pty. Ltd. v. CLS Bank International...

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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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