Déjà vu all over again: Patentablity of computer implemented software

The U.S. Supreme Court will weigh in (again) on what constitutes patent eligible subject matter (under 35 U.S.C. § 101) when it hears the case of Alice Corp. v. CLS Bank. Like the movie, Groundhog Day, the U.S. Supreme Court will once again decide what "things" are patentable. 

Distilling down the issue in CLS, the Supreme court will decide whether a general purpose computer (think PC, Mac, or server) programmed to conduct financial transactions is eligible for patenting.  Claim 1 (below) is exemplary of the patent claims in suit.

1. A data processing system to enable the exchange

of an obligation between parties, the system

comprising:

            a data storage unit having stored therein information

about a shadow credit record and

shadow debit record for a party, independent

from a credit record and debit record maintained

by an exchange institution; and

            a computer, coupled to said data storage unit, that

is configured to:

(a) receive a transaction;

(b) electronically adjust said shadow credit

record and/or said shadow debit record in order

to effect an exchange obligation arising

from said transaction, allowing only those

transactions that do not result in a value of

said shadow debit record being less than a

value of said shadow credit record; and

(c) generate an instruction to said exchange

institution at the end of a period of time to adjust

said credit record and/or said debit record

in accordance with the adjustment of said

shadow credit record and/or said shadow debit

record, wherein said instruction being an irrevocable time invariant obligation placed on said exchange institution.

But we all (including the Supreme Court) have seen the exercise of determining patent subject matter eligibility before.  For example, Gottschalk v. Benson, 409 U.S. 63 (1972) (decimal to binary number converting programmed computer); Parker v. Flook, 437 U.S. 584 (updating an alarm); Diamond v. Dierh, 450 U.S. 175 (1981) (curing rubber) ; Bilski  v.Kappo, 130 S.Ct. 3218 (2010) (hedge fund business method); Mayo v. Prometheus, 566 U.S. ___ (2012) (correlating drug metabolism); and Association for Molecular Pathology v. Myriad Genetics, 569 U.S. ___ (2013) (isolated DNA).  So what is new here to decide?

The en bank Fed. Cir. (lower court decision that is the subject of the CLS appeal), found the above claim 1 ineligible for patenting (articulated in the plurality opinion as a machine/computer/apparatus that purportedly implements an abstract financial method and subsumes the entire general abstract idea).  This all sounds eerily familiar.  It echoes to the past as if from the ghost of Supreme Court Justice Douglas past (Douglas being the opinion writer in Benson finding that implementing a mathematical principle on a physical machine, e.g. a computer, is not a patentable application of that principle).

If I were to predict the outcome in CLS, based on the most recent S.Ct. patent cases, I would say that the Supremes will (1) find the CLS computer implementing financial transactions (apparatus/data system/"machine") claims are invalid under § 101 as being abstract (per se) as subsuming the general abstract financial transaction "idea", citing Benson, and the other aforementioned S.Ct. decisions above, and (2) find the Fed. Cir. plurality opinion regarding the specific framework and/or standard for analyzing an apparatus claim for § 101 patent subject matter eligibility (i.e. extraction of the general idea of a claim and then determine whether the idea is abstract and subsumes the general idea) is not valid.

Happy Christmas!

© Stephen J. Weyer 2013

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