The US Court of Appeals for the Federal Circuit found a software patent directed to automating previously manual processing of loan applications to be ineligible subject matter, because the claims did not amount to a technical improvement sufficient to render the abstract idea patent eligible. Credit Acceptance Corp. v. Westlake Services, Case No. 16-2001 (Fed. Cir., June 9, 2017) (Dyk, J).

The patent at issue relates to providing financing for a customer to purchase a product selected from an inventory maintained by a dealer. While certain computer elements, such as a “database,” “user terminal” and “server,” are recited, the claims are directed to gathering financing information from multiple electronic data sources and providing a dealer with a comprehensive report about a customer’s financial worthiness. After Credit Acceptance Corp. (CAC) sued Westlake alleging patent infringement, Westlake filed two petitions at different times for covered business method review of the patent. Westlake filed a first petition that pre-dated the Supreme Court of the United States’ 2014 decision in Alice, and the Patent Trial and Appeal Board (PTAB) decided not to institute review on a subset of the claims in view of the then-prevailing decision in Ultramercial. After the Supreme Court rendered its decision in Alice, Westlake filed a second petition, this time challenging the subset of claims not instituted for review in the first proceeding. The PTAB instituted review of the subset claims of the second proceeding and issued a final written decision, finding the challenged claims patent ineligible under § 101. CAC appealed.

The Federal Circuit affirmed. Regarding step one of the Alice inquiry, the Court found the challenged claims directed to an abstract idea; it found no meaningful distinction between the financial practices recited in the claims and the abstract concepts of intermediated settlement and hedging. Unlike the “self-referential table” in Enfish  and the “automatic use of rules of a particular type” in McRO, the claimed automation of previously manual processing of loan applications using generic computers, including communication between previously unconnected systems, did not amount to a patentable improvement in computer technology. The Court dismissed CAC’s argument that the claims were not directed to an abstract idea because they improved the functionality of a general purpose computer by programming fundamentally new features, explaining that the claims’ focus on a long-standing economic practice merely invoked generic computer elements. The Court also concluded that the collection of data from multiple electronic data sources and the presentation of the collected data was a patent-ineligible abstract concept.

Regarding step two of the Alice inquiry, the Federal Circuit found that the use of the claimed generic computer elements did not transform the claim as a whole into significantly more than a claim to the abstract manual process, explaining that the claims failed to recite any non-conventional software for enhancing the process.