Corporate Counsel: Continued Uncertainty Over Patentable

June 25, 2013 Continued Uncertainty Over Patentable Subject Matter Mark Baghdassarian and Matthew F. Abbott The Federal Circuit has long a computerized trading platform that struggled to clarify the standard for uses an intermediary to mitigate determining whether a computer- risks in trading stocks or currency, implemented invention is patent- finding the claims were directed to an ineligible because it falls under abstract idea and therefore ineligible the “abstract idea” exception to for patent protection. On appeal, a patentability. Most recently, in CLS panel of the Federal Circuit reversed, Mark Matthew Bank Int’l v. Alice Corp. Pty., Ltd., and subsequently the court agreed to Baghdassarian Abbott No. 2011-1301, an en banc Federal hear the case en banc. The en banc Circuit confronted this issue directly court issued a two-paragraph per but could not reach a consensus on is promoted when subjective and curiam opinion, affirming the district the applicable standard, resulting in empty words like “contribution” or court ruling that all claims were six opinions by the 10 sitting judges. “inventiveness” are offered up by ineligible under 35 U.S.C. § 101. The core of the disagreement focused the courts to determine investment, on how expansively the abstract idea resource allocation, and business Judge Lourie’s Opinion exception to patentability should be decisions . Judge Alan Lourie, joined by applied, and how to interpret the As I start my next quarter century Judges Timothy Dyk, Sharon Prost, U.S. Supreme Court’s “inventive of judicial experience, I am sure that Jimmie Reyna, and Evan Wallach concept” requirement to the abstract one day I will reflect on this moment (the “Lourie Group”), found each idea exception pursuant to Mayo as well. I can only hope it is a brighter of the method and system claims Collaborative Servs. v. Prometheus reflection than I encounter today." to be ineligible for patentability. Labs, Inc., 132 S. Ct. 1289 (2012). This uncertainty will continue Under this group’s approach, a court This article endeavors to identify until there is clarification by either must first identify the abstract idea the operative standards outlined by the Supreme Court (possibly in and then determine whether there the various opinions, but this is not an the short term), or Congress or exists any “additional substantive easy task. Indeed, Chief Judge Randall subsequent Federal Circuit decisions limitations that narrow, confine or Rader in his “Additional Reflections” in the long term. otherwise tie down the claim so opinion recognized the lack of clear that . it does not cover the full direction from the Court: CLS Bank Litigation Background abstract idea itself.” "I enjoy good writing and a good In CLS Bank, the district court This group viewed this substantive mystery, but I doubt that innovation held invalid certain claims covering limitation requirement as the June 25, 2013 “inventive concept” the Supreme By contrast, Judges Rader and Moore the claims should be addressed under Court required in Prometheus, which found the method claims to be invalid sections §§ 102 (anticipation), 103 must be a “genuine human contribution because they viewed the claimed (obviousness) and 112 (adequate to the claimed subject matter” that is method steps to be an inherent part of disclosure) of the statute. “more than a trivial appendix to the an escrow arrangement, and therefore underlying abstract idea.” The Lourie providing no “inventive concept.” Conclusion Group further explained that a human CLS Bank provides no clear way contribution cannot confer eligibility Judge Moore’s Opinion forward in assessing the eligibility to an otherwise abstract claim where Judge Moore filed a separate opinion of software patents, and it remains it is “merely tangential, routine, well- dissenting in part from the per curiam uncertain whether the Supreme understood, or conventional, or fail[s] opinion, joined by Chief Judge Rader Court will grant a petition for in practice to narrow the claim relative and Judges Linn and O’Malley. Judge certiorari in this case. Companies to the fundamental principle therein.” Moore warned that finding all claims that are prosecuting, acquiring, or to be ineligible will cause “the death litigating software patents should Chief Judge Rader’s Opinion of hundreds of thousands of patents, be aware of the various approaches Chief Judge Rader, joined by including all business method, taken by the judges in these opinions, Judges Richard Linn, Kimberly financial system, and softwareconsider how each approach might Moore and Kathleen O’Malley (the patents.” In her view (similar to that affect their business strategy, and “Rader Group”), found the system of Chief Judge Rader), specifying the monitor further developments in this claims to be patent eligible. In this limitations and structure of a claimed area of uncertainty. group’s view, the relevant inquiry machine provides the “inventive focuses on whether a claim contains concept” that meaningfully limits Mark Baghdassarian is a partner a meaningful limitation restricting it the claim. Judge Moore regarded in the intellectual property group of to an application of an abstract idea, the system claims as “detailed” and Kramer Levin Naftalis & Frankel. rather than the abstract idea itself. “specific to a system of particular His practice involves complex patent Where claims tie an abstract idea hardware programmed to perform infringement actions involving satellite to a specific way of doing something particular functions.” She rejected radio devices and services, Hatch- with a computer, or disclose a specific Judge Lourie’s notion that the system Waxman Act-based disputes, digital computer for doing something, claims were merely method claims in imaging technology, and devices used in they will likely be patent eligible. disguise, and asserted that a computer the semiconductor industry, as well as Such meaningful limitations may does not become an abstract idea “by negotiating and drafting technology and include the computer being part virtue of the software it is running.” licensing agreements. Matthew F. Abbott of the solution, being integral to is an associate in the group and focuses the performance of the method, Judge Newman’s Opinion primarily on litigation of intellectual or containing an improvement in Judge Pauline Newman filed her property and commercial disputes. computer technology. own opinion and urged that the As to the method claims, the Rader attempts to define a “universal Group was split. In a separate opinion, criteria of eligibility” by defining Judges Linn and O’Malley found the “abstractedness,” “preemption,” and method claims valid, pointing to “meaningfulness” were “heroic,” the parties’ acknowledgments in the but misguided. In Judge Newman’s record that all the claims contained the view, the eligibility inquiry should same meaningful limitations, and that be strictly limited to the statutory Reprinted with permission from the June 25, 2013 edition of COR- PORATE COUNSEL © 2013 ALM Media Properties, LLC. This every limitation in the system claims classes set forth in 35 U.S.C. § 101, article appears online only. All rights reserved. Further duplication without permission is prohibited. For information, contact 877- must be read into the method claims. and issues concerning the breadth of 257-3382 or [email protected]. # 016-06-13-07.

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