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CLS Bank v. Alice Corp.: a New Hermeneutic of Suspicion

CLS Bank Int’l v. Alice Corp.PTY, (2013 WL 1020941 (C.A.Fed.)(Dist.Col))), a per curiam opinion of the Federal Circuit, conflates method, system, and media claims in rejecting all of them under 35 USC § 101. The Court’s reasoning depends upon the proscription against “abstract ideas” in Supreme Court judicial precedent interpreting the statute. This article suggests that this is an incorrect approach.

Every patent claim contains an abstract idea. It has to, because we are using words to describe the claimed invention. If we could put the invention itself into a claim, then the idea might not be abstract. Even a claim to a simple mechanical invention such as a wrench is abstract, e.g.,

1. A wrench for removing a bolt from a workpiece.

“Wrench,” “bolt,” and “workpiece” are all abstract at some level: we do not include the actual physical objects in the claim. Of course we don’t because a) the PTO would have to store the actual physical objects and b) any competitor would have to get access to the actual physical objects to design around the claim.

Then, of course, the conscientious patent draftsman, realizing that he or she does not know of all possible prior art, and desiring to get the broadest claim coverage, will proceed to a higher level of abstraction:

2. A tool for removing a fastener from an object.

But “tool” and “fastener” may be too broad, considering the known prior art. Nevertheless, this “abstract” claim will never be rejected under 35 USC § 101. Why? Because it does not claim a computer process. Correctly, the Examiner will look at the other provisions of patentability: 35 USC §§ 112, 102, and 103.

Why should the examination process be different for claims drawn to computer inventions? If we claim the binary code that carries out the programmed function, a claim might not be “abstract,” e.g:

1. A computer, having a processor, a memory, and an input/output device, the memory having binary data, the binary data being executed by the processor, each group of binary digits comprising an instruction directing the processor,  the instructions further comprising:

a) 010010101001

b) 100000100111

etc.

But of course, no patent draftsman would write such a claim. The binary representation of the program would be exceedingly long, infringement could only be proved by getting a copy of the actual binary data of the alleged infringer, etc.  Instead, the draftsman would begin by writing an “abstract” claim, e.g.,

2. A method of addition on a computer having a processor, a memory, and an input/output device, the memory having a program executed by the processor, the program comprising the following steps:

a) store a first number in a first portion of the memory;

b) store a second number in a second portion of the memory; and

c) add the first number and second number, storing the result in a third portion of the memory.

The claim now covers the implementation of the program in many possible computers, no matter what the actual binary coding of the instructions is for that computer. This is good. But the claim is abstract: it is not limited to the actual concrete instructions in a particular computer. Note also that the claim claims a mathematical algorithm (addition). It is also a method claim. It is also not limited to a particular machine. For all of the above reasons, the claim would undoubtedly be rejected under § 101, Bilski v. Kappos, and the USPTO Memorandum “Interim Guidance for Determining Subject Matter Eligibility for Process Claims in view of Bilski v. Kappos.”

A different method claim that might be eligible under the “Interim Guidance” memorandum would have the following characteristics:

(1)   incorporation of a particular machine or apparatus;

(2)   the machine or apparatus implements the steps of the method, as opposed to where the machine or apparatus is merely an object on which the method operates;

(3)   the machine or apparatus imposes meaningful limits on the execution of the claimed method steps;

(4)   performance of the claimed method results in or otherwise involves a transformation of a particular article;

(5)   performance of the claimed method does not involve an application of a law of nature;

(6)   a general concept (principle, theory, plan or scheme) is not involved in executing the steps of the method.

Is there any doubt in the reader’s mind that most of the words in the above guidance are abstract? What is the difference between an apparatus “implementing the steps of the method” and the apparatus is “merely an object on which the method operates?” What are “meaningful limits?” What is “transformation” and what is “a particular article?” What is a “law of nature?” What is a “general concept?”

How can a patent draftsman avoid claiming an abstract idea when the USPTO’s guidance is so highly abstract? He or she has a very difficult task, indeed.

So what is the patent draftsman to do? In addition to method claims, the draftsman writes system claims. Presumably, these claims are no longer subject to the “Interim Guidance for Determining Subject Matter Eligibility for Process Claims in view of Bilski v. Kappos” Memorandum. This was a generally accepted best practice until CLS Bank. The draftsman wrote a claim to a computer, a memory, a processor, and an input/output unit. Execution of the claim resulted in the transformation of a particular article (a real-world physical object ideally). The claim did not involve an application of a law of nature (whatever that may be!) And the claim did not involve the execution of the steps of a general concept on the machine (whatever a “general concept” might be!)

A system claim that a draftsperson might write would be the following:

3. A system for adding two numbers, the system comprising a processor, a memory, and an input/output device, the memory having a program executed by the processor, the program comprising the following steps:

a) store a first number in a first portion of the memory;

b) store a second number in a second portion of the memory;

c) add the first number and second number, storing the result in a third portion of the memory; and

d) output the results through the input/output device.

Note that in the above claim: the claim is drawn to physical objects (processor, memory, input/output device); the machine implements the steps of the method; the machine imposes meaningful limits on the execution of the claimed method steps; performance of the claimed method results in the transformation of a particular article (the computer’s memory); performance of the claimed method does not involve an application of a law of nature; and a general concept is not involved in executing the steps of the method.

This claim very likely would not be patentable under 35 USC § 102, but is there any reason to treat it differently under 35 USC § 101 than the claim to a wrench above?

Since CLS Bank, however, the claim must not only pass the USPTO’s “Interim Guidance” memorandum for method claims. CLS Bank now sets up a hermeneutic of suspicion in examining system claims, as well as method claims. Apparently believing that all patent draftspersons employ “clever claim drafting” to merely recast an ineligible method claim into a system claim, the Court in its per curia opinion decides that, although the claims are “formally drawn to physical objects” it is “often a straightforward exercise to translate a method claim into system form, and vice versa.” The “asserted method and system claims require performance of the same basic process.”

Well, of course the system and method claims require “performance of the same basic process”: the invention! As we have seen, any claim to an invention involves the use of words, and therefore involves “abstraction.” We have also seen that the USPTO “Interim Guidance for Determining Subject Matter Eligibility for Process Claims in view of Bilski v. Kappos” memorandum uses highly abstract words to guide the Examiner (and claim draftsperson) in deciding what is an abstract claim. To provide maximum claim coverage for the inventor, the patent draftsperson drafts system claims as well as method claims. Now, after CLS Bank, because the system claims are in the same patent application as the method claims, the ineligible subject matter in the method claims has infected the system claims with ineligibility.

So, continuing with our example, transforming the above method claim into a system claim would not result in patentability.

As Judges Moore, Rader, Linn, and O’Malley write in their dissenting-in-part opinion, the per curia opinion “lump[s] together the asserted method, media, and system claims…holding that they are all patent-ineligible…giv[ing] staggering breadth to what is meant to be a narrow judicial exception.” These judges predict that this holding may be the death-knell for “hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications systems.”

The consequences of Bilski and other recent cases on 35 USC § 101 have now reached a nadir. The snake has swallowed its own tail. In attempting to establish a Procrustean bed on which to make all computer software claims fit, the Federal Circuit is cutting the legs off software patents. The per curia opinion’s statement in CLS Bank that the approach “might also inform patent-eligibility in other contexts” (i.e. medical treatments, gene patents, etc.) can only make one shudder.

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Federal Circuit is “Irretrievably Fractured” over System Claims: “CLS Bank v. Alice Corp.”

In CLS Bank Int’l v. Alice Corp. PTY. LTD (2013 WL 1920941 (C.A.Fed.(Dist.Col))), the Federal Circuit has arguably provided the first substantive guidance on the patentability of software patents with claims drawn to systems, methods, and computer readable media since Bilski v. Kappos. And that guidance is arguably not good news for software patents.

In the per curia opinion, the Court writes:

“What is needed is a consistent, cohesive, and accessible approach to the § 101 analysis–a framework that will provide guidance and predictability for patent applicants and examiners, litigants, and the courts. As set forth below, the Supreme Court’s foundational § 101 jurisprudence offers the guideposts to such a system, one that turns primarily on the practical likelihood of a claim preempting a fundamental concept. We would adopt this approach to address the abstractness of the specific computer-implemented inventions presented in this case, but it might also inform patent-eligibility inquiries arising in other contexts.”

Although on the surface the Federal Circuit’s standard procedure for determining the § 101 patent eligibility of software patents does not seem to have been substantially modified, the practical guidance does appear to make it more difficult for the patent draftsman to avoid a § 101 rejection on system, process, and computer-readable media claims.

The Court’s rejection of the process and computer-readable media claims is not surprising considering how close the claims were to those earlier rejected by the Supreme Court in Bilski. However, the Court’s basis for its rejection of the system claims arguably sets forth a new standard. Basically, the Court looks skeptically at system claims that appear merely to cast an ineligible method claim in system form by adding limitations to a computer:

“…applying a presumptively different approach to system claims generally would reward precisely the type of clever claim drafting that the Supreme Court has repeatedly instructed us to ignore. As illustrated by the obvious parallels between the method and system claims now before us, it is often a straightforward exercise to translate a method claim into system form, and vice versa.”

It should be noted that the dissenting opinion of Judges Moore, Rader, Linn, and O’Malley disagrees with the per curia opinion regarding system claims, arguing that the “computer covered by this claim is a tangible item that you could pick up and put on your desk.” However, the per curia opinion arguably significantly narrows the patentability of system claims, stating:

“A particular computer system, composed of wire, plastic, and silicon, is no doubt a tangible machine. But that is not the question. The question we must consider is whether a patent claim that ostensibly describes such a system on its face represents something more than an abstract idea in legal substance. Claims to a computer were, and still are, eligible for patent. No question should have arisen concerning the eligibility of claims to basic computer hardware under § 101 when such devices were first invented. But we are living and judging now…and have before us not the patent eligibility of specific types of computers or computer components, but computers that have routinely been adapted by software consisting of abstract ideas, and claimed as such, to do all sorts of tasks that formerly were performed by humans. And the Supreme Court has told us that, while avoiding confusion between § 101 and §§ 102 and 103, merely adding existing computer technology to abstract ideas — mental steps — does not as a matter of substance convert an abstract idea into a machine…Abstract methods do not become patent-eligible machines by being clothed in a computer language.”

The Moore, Rader, Linn and O’Malley dissenting opinion takes strong issue with the per curia opinion, dramatically holding that “the current implementation of § 101, and in particular the abstract idea exception, is causing a free fall in the patent system…if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunication patents.”

Considering that the Federal Circuit is “irreconcilably fractured over these system claims,” Judges Moore, Rader, Linn, and O’Malley believe the Supreme Court must once again address § 101.

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