Manifestly Evident Divide Within The Federal Circuit Over Patent Eligibility

In an important opinion, an increasingly divided Federal Circuit Court of Appeals has once again addressed the delicate question of when the use of a computer renders an otherwise abstract idea patentable. As with other recent cases in this area, this opinion is as noteworthy for the division among the judges of the court as it is for the decision of the majority.

CLS Services obtained several patents covering a computerized trading platform for settling mutual obligations of banks through a trusted third party. Defendant Alice Corporation challenged the eligibility of the claimed inventions, arguing successfully to the trial court that the patents were not directed at patentable subject matter. Inevitably, an appeal to the Federal Circuit followed.

The majority, Judges Linn and O’Malley, focused on perceived difficulties facing courts in determining which inventions are unpatentably abstract and which are patentably concrete. In the words of the majority, “The abstractness of the ‘abstract ideas’ test to patent eligibility has become a serious problem, leading to great uncertainty and to the devaluing of inventions of practical utility and economic potential.” The majority characterized the “essential concern” of this doctrine as determining “the extent to which preemption [by a patent] results in the foreclosure of innovation.” The duty of the court, then, is not “to go hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patent actually claims,” but rather “to consider the asserted claim as a whole.” On this basis, the court reached a broad holding: “[T]his court holds that when—after taking all of the claim recitations into consideration—it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101.…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’ under 35 U.S.C. § 101.” Under that test, the claims at issue in the case passed muster, and the trial court was reversed.

In dissent, Judge Prost did not pull any punches: “The majority resists the Supreme Court’s unanimous directive to apply the patentable subject matter test with more vigor. Worse yet, it creates an entirely new framework that in effect allows courts to avoid evaluating patent eligibility under § 101 whenever they so desire.” In light of the Supreme Court’s holding in Mayo v. Prometheus, Judge Prost concludes, “Now there is no doubt that to be patent eligible under § 101, the claims must include an ‘inventive concept,’” and chides the majority for failing to perform the requisite analysis. The result, according to the dissent, is that the Federal Circuit has revived the proposal rejected by the Supreme Court in Prometheus that courts should avoid the knotty problems of patent eligibility whenever possible. “That suggests that the majority’s ‘manifestly evident’ standard is more of an escape hatch than a yardstick.”

It remains to be seen whether the Supreme Court—the ultimate arbiter of disputes within the Federal Circuit bench—will accept the inevitable call to bridge the growing divide over what to do about Section 101 and patent eligibility, either in this case or another.

Posted by David Swetnam-Burland