Federal Circuit Remains Divided on Determining Patent Eligibility under § 101

On May 10, 2013, the Federal Circuit, sitting en banc, issued a per curiam opinion reversing an earlier panel opinion, and affirmed a district court’s judgment of invalidity of method and computer media claims and system claims before it.  The Federal Circuit, however, once again failed to reach an agreement on how to evaluate when an abstract idea is patent-eligible, leaving both patent applicants and lawyers alike with little clarity regarding the standard for patent-eligible subject matter.

CLS Bank International v. Alice Corporation, No. 2011-1301 (Fed. Cir. May 10, 2013) concerns four patents owned by Alice Corporation (“Alice”) describing a computerized trading platform used to conduct financial transactions.  The platform would entrust a third party to ensure the exchange of obligations between two parties to a transaction in order to eliminate settlement risk (the risk to each party in an exchange that only one of the two parties will pay its obligation).  CLS Bank International and CLS Services, Ltd. sued Alice, and was granted summary judgment by the US District Court for the District of Columbia that Alice’s patent claims were patent-ineligible subject matter under 35 U.S.C. § 101.  The district court’s judgment was affirmed by the Federal Circuit, but of greater concern to the public was its inability to coherently draw the line between patentable subject matter and ineligible “abstract ideas.”  In the separate opinions following the per curiam opinion, the judges articulated different methods for evaluating when an abstract idea is patent-eligible, unable to reach a consensus.  One opinion stated that the abstract idea must be isolated from the underlying claim, and the underlying claim then evaluated on its own to determine if it adds significantly more than the abstract idea itself, making it patent-eligible.  Another opinion, however, argued that the whole claim should be evaluated and be patent-eligible if the claim includes meaningful limitations that restrict the abstract idea to a specific application.

In short, this much anticipated Federal Circuit decision leaves many questions regarding patentable subject matter unanswered.  One of the separate opinions hinted at the Supreme Court intervening to illustrate a framework for determining when claims are directed at patentable subject matter.  Although the wait may not be long given the disagreement among the Federal Circuit judges, until then the public at large is left without a proper standard for the determination of patent-eligible subject matter.