IP Alerts

IP Alert
IP Alert: Federal Circuit Issues Another Opinion on Subject Matter Eligibility

August 10, 2012

On July 26, 2012, the Court of Appeals for the Federal Circuit issued its opinion in Bancorp Services v. Sun Life Assurance Co., another of several recent decisions from this court on the issue of patent subject matter eligibility.

In Bancorp, the court focused on the “abstract idea” exception to patent eligibility. The patents at issue claimed computerized methods and systems for tracking the book value and market value of life insurance policies and calculating certain credits and policy values. Some of the claims specified that the steps “are performed by a computer”; other claims called for a “computer readable medi[um] for controlling a computer to perform the steps” of a recited method.

The district court held that the patent claims were invalid because they fell into the "abstract idea" exception to subject matter patentability. The court held that “the asserted claims do not meet either prong of the machine-or-transformation test—which, while ‘not the sole test for deciding whether an invention is a patent-eligible “process,”’ remains ‘a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101’” (citations omitted).

On appeal, the Federal Circuit affirmed, finding that the claimed technology constituted an impermissible abstract idea. The court held that simply adding “computer aided” limitations to a patent claim that cover an abstract idea, without more, is insufficient to save the claim. In other words a machine, system, or medium may in some cases be tantamount to an abstract idea or mental process for purposes of patent ineligibility. The court further stated that to “salvage an otherwise patent-ineligible process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not.” Using a computer to accelerate an ineligible mental process does not make that process patent-eligible.

The court distinguished another decision, Research Corp. Techs., Inc. v. Microsoft Corp., which upheld the patent eligibility of that invention. That case involved processes for enabling a computer to render a halftone image of a digital image by comparing, pixel by pixel, the digital image against a two-dimensional array. The court noted that the claimed processes in Research Corp. represented improvements to computer technologies in the marketplace. The underlying method was dependent upon the computer components required to perform it. In contrast. the court held, no such technological advance was evident in the claimed invention of Bancorp Services.

The court also distinguished a more recent decision, CLS Bank International v. Alice Corp. Pty. Ltd. (as reported in a previous alert here), where the court upheld patent eligibility. CLS Bank involved a patent for the settling of obligations between two parties to an agreement (i.e., for a trade, sale, or exchange) using a computerized trading platform. The CLS Bank case is similar to the present Bancorp case in that both involved inventions having a strong business method component. The Bancorp panel observed that “it [wa]s difficult to conclude that the computer limitations [in CLS Bank] . . . d[id] not play a significant part in the performance of the invention or that the claims [we]re not limited to a very specific application of the [inventive] concept.” On the other hand, held the court, in the case at bar the computer limitations did not play a “significant part” in the performance of the claimed invention.

The Bancorp case is significant for those Fitch Even clients who prosecute or litigate patents in the business method and computer software fields. For more information on this case, please contact Fitch Even partner Gary D. Mann.

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