What Is an Unpatentable “Abstract Idea?” US Federal Circuit May Decide.

Patent, Abstract IdeaToday, in CLS Bank International v. Alice Corp., No. 2011-1301 (Fed. Cir. Oct. 9, 2012), the U.S. Court of Appeals for the Federal Circuit ordered an en banc rehearing in yet another case that will test the boundaries of what may and may not be patented under United States law. This time the issue is whether a claimed computer-assisted process is too abstract for a patent.

The patent claims in Alice Corp. cover a computer system for aiding in closing financial transactions in a manner that avoids settlement risk. A U.S. district court initially held that the claimed “invention” was not patentable because it was essentially an “abstract idea” — a category that U.S. courts have long deemed ineligible for patents. According to the district court, the mere fact that the invention was implemented by a computer did not render it patent eligible. In an appellate decision dated  July 9, 2012, however, a three-judge panel of the Federal Circuit reversed. CLS Bank International v. Alice Corp., No. 2011-1301 (Fed. Cir. Jul. 9, 2012). Concluding that the “abstract idea” barrier to patenting should be invoked only in a narrow band of cases, the Federal Circuit wrote that,

Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea.”

Applying this standard, last summer’s Federal Circuit panel held that the patent claims in question were patent-eligible.

In today’s order for a rehearing, the Federal Circuit announced that, after a poll of the circuit’s judges, the court has decided that the case should be reheard–this time by all the court’s judges. The order frames the issues to be considered en banc as follows:

a. 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?

b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?

The court’s order provides that oral argument “will be held at a time and date to be announced later.”

 by Shawn N. Sullivan, Oct. 9, 2012.

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