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Covered Business Method Patent Held Invalid under 35 USC 101 and Alice.

The Patent Trial and Appeal Board (PTAB) has issued a Final Written Decision of the invalidity of an Internet-related patent under the subject matter restrictions of 35 U.S.C. 101.

In Bank of America, N.A., PNC Financial Services Group, Inc. and PNC Bank, N.A, vs. Intellectual Ventures I LLC, the PTAB found claims 1-23 of U.S. Patent No. 7,603,382 B2 (“the ‘382 patent”) to be unpatentable as directed to patent-ineligible subject matter under 35 U.S.C. 101 and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014) as being directed to an “abstract idea.”

A sample claim of the challenged patent is as follows:

  1.  A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:a display depicting portions of the web site visited by the user as a function of the web site navigation data; anda display depicting portions of the web site visited by the user as a function of the user’s personal characteristics.

In arriving at its decision, the Board considered the following arguments on the part of the Patent Owner:

  1. that the claims of the ‘382 patent are not “directed to ‘an idea itself, a mathematical formula or algorithm, a fundamental economic practice long prevalent in our system of commerce, or a method of organizing human activity.'”
  2. that the claims of the ‘382 patent “do not preempt the alleged abstract idea and are transformed by an inventive concept.” That claims 1-6 and 16-23 user the claimed interactive interface to provide tailored content based upon the user’s personal characteristics and the user’s website navigation data.
  3. That the ‘382 patent is not a covered business method patent because the claims are directed to a technological invention.
  4. That Section 101 is not a proper ground upon which a covered business method patent review may be maintained.

The Board based its decision regarding argument 1 on the recent U.S. Supreme Court holding in Alice, setting out a two-step test for patentability of an abstract idea. Key to this step 1 was a statement by the Patent Owner’s expert, who testified that “the patent is described at what may appear to be a fairly high abstract level.” In responding to argument 2, the Board held that the limitations of the claims do not contain an “inventive concept” to “transform” the claimed abstract idea into patentable subject matter. Key to this step was, again, testimony of the Patent Owner’s expert that “the ‘382 patent lacks implementation details because it is written at a ‘fairly high abstract level.’” The Board distinguished the ‘382 patent from the Federal Circuit’s decision in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014). In responding to argument 3, the Board held that in at least claim 11 “there is no technological feature in that claim that is novel and unobvious.” Finally, in regard to argument 4, the Board held that Section 101 is a proper ground for instituting a Covered Business Method patent proceeding.

CLS Bank v. Alice Corp. – “Abstract” Computer Patents Under Attack

The Electronic Frontier Foundation (“EFF”) has filed an amicus brief in CLS Bank v. Alice Corp., wherein the Federal Circuit will be holding an en banc hearing to address the issue of when a computer implemented patent should be invalidated under 35 U.S.C. § 101 for claiming an abstract idea.  Section 101 provides that”[w]hoever invents or discovers anynew and useful process, machine, manufacture, or composition of matter, or anynew and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”  Despite Section 101’s broad and sweeping language, the Supreme Court has routinely recognized that there are limits to what can be patented, and that “laws of nature, physical phenomena, and abstract ideas” fall outside the scope of § 101.  Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010).

The patents in question in CLS Bank v. Alice Corp.[1] cover a computerized trading platform for exchanging obligations so as to eliminate “settlement risk.”(such a platform can be used for stock and foreign currency trades).  The District Court invalidated the patent under Section 101 as covering an “abstract idea” ineligible for patent protection.  The Federal Circuit initially overturned the lower court and upheld the validity of the patent.  According to the majority opinion, “[W]hen — 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.”  The Court went on to determine that the claims in question passed its newly formulated test because they “appear to cover the practical application of a business concept in a specific way. . .”  The Court’s opinion highlighted specific elements such as creating electronically maintained shadow credit and shadow debit records, requiring such shadow credit and debit records to be held independently of the exchange institution by a supervisory institution, etc.

Some commentators believe the Federal Circuit’s decision ignored and/or was inconsistent with recent precedent seeking to rein in the scope of patent eligible subject matter.  According to EFF’s attorney Julie Samuels, patents like the one involved in CLS Bank v. Alice Corp. “lead to harmful monopolies on simple ideas like ways of running a business or cooking a meal.”  Recognizing the inherent difficulties of defining what constitutes an improper “abstract idea”, the EFF is advocating for a more vigorous application of Section 112(f) to combat the perceived problem of overbroad computer implemented patents.  Section 112(f) requires disclosure of structure corresponding to the acts covered by the patent.  According to the EFF, software patents that do not contain an algorithm should automatically be found invalid.  “Giving Section 112(f) the teeth Congress intended would simplify the Section 101 inquiry by limiting the scope of the question and eliminating from contention many patents that this court has already found to be impermissibly abstract,” the group argues.

The Federal Circuit’s en banc order has formulated the questions presented 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?

Oral argument has not yet been scheduled for the en banc hearing.  Stay tuned.


[1] U.S. Patent Nos. 5,970,479; 6,912,510; 7,149,720; and 7,725,375.

Are Human Genes Patentable?

Certiorari granted on this question.

Figure 4 of the 5,747,282 Patent

Figure 4 of the 5,747,282 Patent

Nelson Capes previously blogged about the Association for Molecular Pathology vs. Myriad Genetics case here and the science behind it here.

SCOTUSblog has copies of the Supreme Court pleadings here.

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