CLS Bank International v. Alice Corporation: Poison Apple

May 24th, 2013

This is a guest post from Ron Schutz of Robins, Kaplan, Miller & Ciresi.

Move over Snow White.  A deeply-divided Federal Circuit in CLS Bank Int’l.  v. Alice Corp. Pty. Ltd., issued a per curiam opinion that dwarfs the scope of patent-eligible subject matter under § 101―and turns business method software into the saddest (former) patents of them all.  Because the majority could not agree on a rationale for its conclusion that the method and computer-readable medium claims at issue lacked subject matter eligibility, the seven-opinion decision (it seems no one was Bashful) has no precedential weight.  A not-so-Happy dissenting Judge Moore stared into the magic mirror and asked if CLS Bank may be “the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.”  Any hope of a happily-ever-after for those patents now hinges on whether the Supreme Court bestows a reviving, certiorari-granted kiss or, instead, wickedly tells patent holder Alice Corporation (and the rest of the majority software industry) to kiss off.

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Supreme Court Decides Bowman v. Monsanto for Monsanto

May 15th, 2013

On May 13th, a unanimous Court found that the doctrine of patent exhaustion “does not allow the purchaser to make new copies of the patented invention.” [A copy of decision is at the end of this post.] In this case, the patented invention was a soybean seed obtained from a plant that had been genetically altered so that it is resistant (“survives exposure”) to the herbicide glyphosate. I know that this is “yesterday’s news” by now, but I need a break from plumbing the depths of CLS v. Alice, so I thought I would offer a few observations. (I also did posts when the Fed. Cir. ruling came down, when the Supreme Court granted cert. and when oral argument was heard.)

At least this was a “patent friendly” decision, and the Court even spent some time discussing its relationship with J.E.M. v. Pioneer Hi-Bred, 534 U.S. 124 (2001) in which a divided Supreme Court held that utility patents were available for plants, despite the protections offered by Plant Variety Protection Act Certificates (PVPA certificates). Slip op. at 7. In that decision, the Court held that “only a patent holder (not a certificate holder) could prohibit ‘[a] farmer who legally purchases and plants’ a protected seed from saving harvested seed ‘for replanting’…(noting that the Patent Act, unlike the PVPA contains ‘no exemptio[n]’ for ‘saving seed’).”

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CLS Bank v. Alice Corp. (Part 2)

May 14th, 2013

I hope that some of my loyal readers noticed that my last post on CLS was incomplete, since it did not elaborate on the rationale for the decision(s) arrived at by the majority, either directly or by default.

The first 23 pages of the  opinion, written by Judge Lourie, joined by Dyk, Prost, Reyna and Wallace, mostly plods down the well-worn legal trail of Benson, Flook, Diehr, Bilski and now, Mayo v. Prometheus. I read it mostly looking for something new, perhaps a hint of what additional material would render a claim reciting a law of nature patentable.

For example, for some time I have wondered in print what feature in Diehr distinguished the patent-eligible curing process from the patent-ineligible one in Flook. In Parker v. Flook, the Supreme Court held: “If a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory.” Slip op. at 12. This is a much finer filter than one might expect , since the Flook process was drawn to the catalytic chemical conversion of hydrocarbons, but the Court tossed it into the dumpster of “abstract ideas” anyway. Judge Lourie noted that the Supreme Court had started from the posture that the case must be treated as though the abstract principle or mathematical formula were well known. If so, then the claim must contain “some other inventive concept in its application.”

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En (many) banc(s) Fed. Cir. decides CLS Bank v. Alice Corp. (Part 1)

May 13th, 2013

On May 10th, the Federal Circuit issued a short per curium opinion affirming the district court’s decision that “a majority of the court affirms the [holding below] that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 USC s. 101. An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter under that statute.” On page 2, the “majority’ writes:

“While Chief Judge Rader is correct to note that no single opinion issued today commands a majority, seven of the ten members, a majority of this en banc court have agreed that the method and computer readable medium claims before us fail to recite patent-eligible subject matter. In addition, eight judges, a majority, have concluded that the particular method, medium and system claims at issue [for reducing the risk of non-performance of an agreement between two parties by using a trusted third party to hold the pot] – in this case should rise or fall together in the s. 101 analysis.”

Not a promising overture to this legal opera. A novelette of five concurring, concurring-in-part and dissenting-in-part(2), concurring-in-part and dissenting opinions and even “additional reflections” (by Chief Judge Rader) follows and I certainly have not consumed all 140+ pages of that content by any means.

The opinion begins with a 38 page concurrence by Judges Lourie, Dyk, Prost, Reyna and Wallach. In my post on this appeal in October, I summarized the “facts of the matter” and emphasized the tension between Cybersource v. Retail Decisions (no patents for mental processes that can be performed with pencil and paper and no Beauregard claims either) and Ultramercial v. Wild Tangent, where an 11-step process to distribute copyrighted products via the internet was found to be patent-eligible, in part due to its “intricate and complex computer programming” and specific application of the internet in a cyber-market environment. On one side, you end up on the slippery slope of defining an abstract idea. On the other, you are faced with arguing that a rock with e = mc2 carved into it is patentable. So I was more than a little interested in how this tension would play itself out (or if it would).

CLSBankMay10

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