On May 10, 2013, the United States Court of Appeals for the Federal Circuit decided, in CLS Bank International v. Alice Corp. (Fed. Cir. 2013) (en banc), to affirm the District Court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 USC §101.  In making the decision, the court acknowledged “The difficulty lies in consistently and predictably differentiating between, on the one hand, claims that would tie up laws of nature, natural phenomena, or abstract ideas, and, on the other, claims that merely “embody, use, reflect, rest upon, or apply” those fundamental tools.  Mayo, 132 S. Ct. at 1293.  The court looked at a number of well-analyzed cases involving patent eligibility of subject matter involving mathematical formulae.  One insight in the court’s §101 inquiry is, “With the pertinent abstract idea identified, the balance of the claim can be evaluated to determine whether it contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.”  This insight appears to direct patentees (and patent practitioners) to draft claims narrower in scope than “the full abstract idea”.  The court reinforces this notion by stating, “Limitations that represent a human contribution but are merely tangential, routine, well-understood, or conventional, or in practice fail to narrow the claim relative to the fundamental principle therein, cannot confer patent eligibility.”  Relative to the claims at issue, the court considers whether claim limitations requiring shadow records, using a computer to adjust and maintain shadow records, and reconciling shadow records and exchange institution accounts adds anything of substance to the idea of third-party intermediation, and concludes these limitations do not.

Another insight in the court’s §101 inquiry is, “Unless the claims require a computer to perform operations that are not merely accelerated calculations, a computer does not itself confer patent eligibility.”  This hints the court would prefer to see (for patent subject matter eligibility) the computer doing more in the claims than just calculating faster than a human could, i.e., the computer’s contribution should be significantly more.  In a subsequent blog entry, we will look at dissenting opinions.