Lamenting how the abstractness of the “abstract ideas” test for patent eligibility has become a serious problem, leading to great uncertainty and to the devaluing of inventions of practical utility and economic potential, the CAFC has taken a bold step here in view of recent Supreme Court precedent (most notably, Bilski II) and tried to craft a more concrete test for subject matter eligibility. Although we may not have seen the last of this case and certainly not this issue, for now, this opinion provides perhaps the best ammunition yet for asserting subject matter eligibility for computer-related inventions. In general, the CAFC seemed to harp on the distinction made in SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir. 2010), explaining that “[i]n order for the addition of a machine to impose a meaningful limit on the scope of a claim, it must play a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations.” Recognizing that any claim can be stripped down, or simplified, removing all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed, the court cautioned against “hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patentee actually claims.” One particularly useful quote to bring to an Examiner’s attention in this regard is as follows: “It is fundamentally improper to paraphrase a claim in overly simplistic generalities in assessing whether the claim falls under the limited ‘abstract ideas’ exception to patent eligibility under 35 U.S.C. § 101. Patent eligibility must be evaluated based on what the claims recite, not merely on the ideas upon which they are premised.” Slip Op. at 19. That being said, we’ll see how the Supreme Court reacts to this one…
Background / Facts: This is the latest installment in the line of cases that examines the question of patent eligibility under 35 U.S.C. § 101 of an invention implemented by computers. The patents at issue cover a computerized trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate “settlement risk.”
Issue(s): Whether the exchange of obligations between parties using a computer meets the subject matter eligibility requirements of 35 U.S.C. § 101 and is not merely an attempt to monopolize an abstract idea.
Holding(s): Yes. The claim limitations at issue can be characterized as being integral to the method, as “play[ing] a significant part in permitting the method to be performed,” and as not being token post-solution activity. The court found it clear, moreover, that the limitations requiring specific “shadow” records leave broad room for other methods of using intermediaries to help consummate exchanges, whether with the aid of a computer or otherwise, and, thus, do not appear to preempt much in the way of innovation. In general, the court held 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.” Perhaps as a way out for district courts to side-step this tricky issue in the future, the CAFC went out of its way to note that 101 concerns “need not always be addressed first, particularly when other sections might be discerned by the trial judge as having the promise to resolve a dispute more expeditiously or with more clarity and predictability.”