Did the Federal Circuit Ignore the Supreme Court in CLS Bank?

While the Supreme Court has done away with the “useful, concrete and tangible result” test from State Street Bank v. Signature Financial, in Bilski v. Kappos, 8 out of 9 Justices (i.e., everyone except Justice Scalia) signed onto an opinion that recognized that the patent claims in State Street displayed patent eligible subject matter. Indeed, the dissenters in Bilski specifically acknowledged that the claims at issue in State Street did not deal with processes, but dealt with machines. See Footnote 40 of the Steven’s dissent.

The import of this is that machines are specifically patent eligible subject matter, so if the claims of State Street are to machines then claims that are similarly configured would also be directed to machines and therefore patent eligible. So if the systems claims at issue in CLS Bank v. Alice Corp. are configured similarly to those that now stand invalid that would mean that Judges Lourie, Dyk, Prost, Reyna and Wallach have ignored the Supreme Court. Any fair comparison of the claims, as shown below, demonstrates this rather conclusively.

Similarly, the United States Supreme Court famously ruled in Diamond v. Diehr, that the United States Patent and Trademark Office inappropriately rejected claims to a computerized process for molding raw, uncured synthetic rubber into cured precision products. Ultimately, thanks to the decision of the Supreme Court the inventors, Diehr and Lutton, received U.S. Patent No. 4,344,142. If the claims in Diamond v. Diehr are similar to those that now stand invalid that would be further proof the Federal Circuit as a whole has ignored the Supreme Court.

Let’s first take a look at the machine claims at issue in State Street and claims ultimately issued to Diehr and Lutton.

Machine Claims in State Street Bank

Claim 1 of U.S. Patent No. 5,193,056, which was at issue in State Street recites:

A data processing system for managing a financial services configuration of a portfolio established as a partnership, each partner being one of a plurality of funds, comprising:

(a) computer processor means for processing data;

(b) storage means for storing data on a storage medium;

(c) first means for initializing the storage medium;

(d) second means for processing data regarding assets in the portfolio and each of the funds from a previous day and data regarding increases or decreases in each of the funds, assets and for allocating the percentage share that each fund holds in the portfolio;

(e) third means for processing data regarding daily incremental income, expenses, and net realized gain or loss for the portfolio and for allocating such data among each fund;

(f) fourth means for processing data regarding daily net unrealized gain or loss for the portfolio and for allocating such data among each fund; and

(g) fifth means for processing data regarding aggregate year-end income, expenses, and capital gain or loss for the portfolio and each of the funds.

(emphasis added to draw attention to the “tangible” elements of the claim).

Now let’s take a look at a couple of the systems claims in CLS Bank v. Alice Corporation. Claim 1 of U.S. Patent No. 7,725,375 recites:

A data processing system to enable the exchange of an obligation between parties, the system comprising:

a first party device,

a data storage unit having stored therein

(a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and

(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution;

and a computer, coupled to said data storage unit, that is configured to

(a) receive a transaction from said first party device;

(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and

(c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

Now look at claim 26 of the ’375 patent:

A data processing system to enable the exchange of an obligation between parties, the system comprising:

a communications controller,

a first party device, coupled to said communications controller,

a data storage unit having stored therein

(a) information about a first account for a first party, independent from a second ac- count maintained by a first exchange institution, and

(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution; and

a computer, coupled to said data storage unit and said communications controller, that is configured to

(a) receive a transaction from said first party device via said communications controller;

(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and

(c) generate an instruction to said first ex- change institution and/or said second ex- change institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

First, notice that in all three claims the preamble recites a data processing system. At least with respect to claim 1 of the ‘056 patent the Supreme Court believed the claim represents a patent eligible machine. So exactly how do the claims in the ‘375 patent cover something that isn’t a machine and isn’t patent eligible?

Clearly, there is no principled way to distinguish the systems claims at issue in State Street from the systems claims at issue in CLS Bank v. Alice Corp. Thus, it seems that Judges Lourie, Dyk, Prost, Reyna and Wallach failed to take into account the fact that 8 out of 9 Supreme Court Justices believe that data processing systems claims represent patent eligible subject matter.

Method Claims

Now let’s look at claim 5 from U.S. Patent No. 4,344,142, issued to Diehr and Lutton, which recites:

A method of operating a plurality of rubber-molding presses simultaneously curing precision molded compounds in conjunction with a computer, comprising:

providing said computer with a data base for each said press including at least,

natural logarithm conversion data (1n),

the activation energy constant (C) unique to each batch of said compound being molded, and

a constant (x) dependent upon the geometry of the particular mold of the said press,

constantly informing the computer of the temperature (Z) of each mold,

informing the computer of the batch of the compound being molded in each mold,

constantly informing the computer of the elapsed time that the compound has been in each mold,

repetitively performing for each said press at frequent periodic intervals during each curve in the computer, integrations to calculate from the series of temperature determinations the Arrhenius equation to determine the total required cure time, which is 1n v=CZ+x, where v is the total required cure time,

repetitively comparing at frequent periodic intervals in the computer the calculated total required cure time and the elapsed time for each said press, and

opening each said press automatically when its elapsed time has reached its calculated total required cure time.

Now let’s look at claim 33 of U.S. Patent No. 5,970,479, which was at issue in CLS Bank v. Alice Corp., and which was deemed representative:

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and

(d) at the end-of-day, the supervisory institution instructing ones of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

At first glance there does not appear to be any tangible structure recited. However, the record was clear. CLS Bank conceded at the Markman hearing and during oral argument at the Federal Circuit that the terms “shadow credit record” and “shadow debit record” recite a transaction that is electronically implemented on a computer or some other electronic device. See page 5 of the opinion of Judges Linn and O’Malley. With that admission during claim construction then claim 33 above does specifically recite a computer implementation or an electronic device.

Given that the defendant admitted that claim 33 incorporates computer implementation there is no principled way to distinguish claim 33 from the ‘479 patent from the ‘142 patent issued to Diehr and Lutton.

Conclusion

It seems pretty clear that at least claims 1 and 26 of the ’375 patent and claim 33 of the ‘479 patent are written as claims specifically believed to be patentable by the United States Supreme Court.

Gene Quinn Gene Quinn is a patent attorney and a leading commentator on patent law and innovation policy. Mr. Quinn has twice been named one of the top 50 most influential people [...see more]

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

29 comments so far.

MarkG
May 23, 2013 12:45 am
Don’t want to speak for Anon, and determining patentability under Section 102 and 103 can get pretty complicated, especially under Section 103.

But with respect to Section 101, I would be okay if the courts ditched most or all of the judicial exceptions to patent eligibility just held a claim to be patent eligible subject matter if covered a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,” just like Section 101 says.

Most of the courts concerns about patent claims that have led to the creation of “judicial exceptions” to Section 101 patent eligibility would end up being addressed under Section 103 or by the inability of a patent holder to actually enforce a claim.

For example, I could deal with the term “process” in Section 101 being interpreted to not includes a purely “mental process” and to give not patentable weight in a claim to a purely “mental step.” But the reality is, trying to prove that a purely mental process is being infringed or that a mental step has been performed, would usually be pretty hard to do without some real world activity going on. And if it is a mental process or mental step that you could prove is being performed, there’s a good shot the step or process stands a good chance of being obvious under Section 103.
Wayne Borean
May 22, 2013 01:01 pm
@ANON

The only thing ‘confusing’ is the extra involvement imparted by the Courts.

Wayne – you are quite missing the point here. 101 is actually far simpler than either 102 and 103. Please don’t ignore 101 and then blast out a statement that shows the depth of that ignorance.

In that case why don’t you give us an in depth evaluation of 101, 102, and 103 as you see them?

Wayne
Anon
May 22, 2013 10:58 am
“Seriously, 102 and 103 aren’t as confusing as 101.”

The only thing ‘confusing’ is the extra involvement imparted by the Courts.

Wayne – you are quite missing the point here. 101 is actually far simpler than either 102 and 103. Please don’t ignore 101 and then blast out a statement that shows the depth of that ignorance.
Wayne Borean
May 21, 2013 07:48 pm
@MarkG

For example, hypothetically, how would you feel if a future Supreme Court that included a bunch of pro-software patent justices, decided that all software claims were nonobvious under Section 103, because the member of the Supreme Court were unable to understand software and therefore, these claims must be nonobvious?

The same way as I feel about the current situation, and why I suggested it needs to go back to the legislature. Only the legislature can change the language of the law.

If it is okay for you for the Supreme Court and Federal Circuit are free to interpet Section 101 any way they feel like, then you should also be okay with the Supreme Court and Federal Circuit intrepreting Section 103 any way they feel like.

Go back and re-read what I wrote. I did not say that it was OK for the courts to interpret the law however they felt like. Again, I said the law needs to be re-written so that it can’t be misinterpreted.

This is why it is important that the Supreme Court and Federal Circuit interpret Section 101 properly. If they cannot even intepret Section 101 in a rational manner, how can they possibly intepret Section 103, which is much more difficult to intepret, in a rational manner? It’s like assuming someone can do Algebra or Calculus when they cannot even add numbers together properly.

That’s why 101 needs a re-write. Seriously, 102 and 103 aren’t as confusing as 101.

Which is why I ignore 101. Nothing can be done with it, because it is a total mess.

Wayne
MarkG
May 20, 2013 10:09 am
“I see no reason to change my stance to the flavour of the week at the Supreme Court or the Federal Circuit. In fact I personally think that Section 101 is a side issue, that needs to be dealt with by the Legislature specifically. Of course since the American Legislature seems to be in a state of Gridlock, this isn’t likely to happen until after the 2016 Elections (I don’t see a change of political balance happening in 2014).

Does Section 101 matter? Yes. It’s part of the law. Is it really germane to the argument? Probably not, because all of the patents that Section 101 would rule out, would also be ruled out by Sections 102 and 103, or at least they would if the Patent Office was doing its job.”

@Wayne

The problem is that if the Supreme Court or Federal Circuit is free to interpret Section 101 based on what it wishes Section 101 says instead of what it actually, it is also free to interpret Sections 102, 103, etc. in the same way. And there is no way for the Legislature to fix things, if the courts are free to intepret the statutes in this way.

For example, hypothetically, how would you feel if a future Supreme Court that included a bunch of pro-software patent justices, decided that all software claims were nonobvious under Section 103, because the member of the Supreme Court were unable to understand software and therefore, these claims must be nonobvious?

If it is okay for you for the Supreme Court and Federal Circuit are free to interpet Section 101 any way they feel like, then you should also be okay with the Supreme Court and Federal Circuit intrepreting Section 103 any way they feel like.

This is why it is important that the Supreme Court and Federal Circuit interpret Section 101 properly. If they cannot even intepret Section 101 in a rational manner, how can they possibly intepret Section 103, which is much more difficult to intepret, in a rational manner? It’s like assuming someone can do Algebra or Calculus when they cannot even add numbers together properly.
Wayne Borean
May 18, 2013 06:10 pm
@MarkG

Please understand your statement above implies that you completely disagree with the Supreme Court’s opinion in Prometheus with respect to Section 101 and at least half of the judges of the Federal Circuit with respect to Section 101. The position of the Supreme Court and at least 5 of the judges of the Federal Circuit is that Section 101 is not as wide as you suggest.

As Gene will probably point out, I disagree with everybody. It’s one of the hallmarks of genius, that no one understands you EVIL GRIN.

Seriously though, the current kerfuffle about Section 101 is relatively new, only a few years old. I’ve been arguing that there are problems with the patent system for nearly ten years, based solely on Sections 102 and 103. I think I have a fairly logical set of reasons for my stance, even if you don’t agree with them.

I see no reason to change my stance to the flavour of the week at the Supreme Court or the Federal Circuit. In fact I personally think that Section 101 is a side issue, that needs to be dealt with by the Legislature specifically. Of course since the American Legislature seems to be in a state of Gridlock, this isn’t likely to happen until after the 2016 Elections (I don’t see a change of political balance happening in 2014).

Does Section 101 matter? Yes. It’s part of the law. Is it really germane to the argument? Probably not, because all of the patents that Section 101 would rule out, would also be ruled out by Sections 102 and 103, or at least they would if the Patent Office was doing its job.

Wayne
Anon
May 17, 2013 01:55 pm
“I and I’m sure the other patent attorneys on this blog agree that Section 102 and Section 103 issues are very important in determining whether a claimed invention is “patentable,” but are irrelevant to the issue of “patent eligibility” under Section 101.”

As would the Supreme Court, as the recent Prometheus case explicitly shut down the government’s breif advocating just that.
MarkG
May 17, 2013 10:02 am
That’s why Sections 102 and 103 are so important in my opinion. They are where the limits on the definition are.”

@Wayne,

“I’ve been ignoring Section 101 because the definition is so wide that it is really impossible to quantify.”

Please understand your statement above implies that you completely disagree with the Supreme Court’s opinion in Prometheus with respect to Section 101 and at least half of the judges of the Federal Circuit with respect to Section 101. The position of the Supreme Court and at least 5 of the judges of the Federal Circuit is that Section 101 is not as wide as you suggest.

Despite what Section 101 states, the Supreme Court’s position is that there are many claims for processes that are not patent eligible because they do not meet the requirements of Section 101. It is the opinion of the judges who concurred with Judge Lourie in CLS that there are many claims for machines and processes that do not meet the requirements of Section 101. It is the opinion of the Supreme Court and 5 judges of the Federal Circuit that not all “processes” are a “process” within the meaning of Section 101. It is the opinion of at least 5 judges of the Federal Circuit that not all “machines” are a “machine” within the meaning of Section 101.

“That’s why Sections 102 and 103 are so important in my opinion. They are where the limits on the definition are.”

I and I’m sure the other patent attorneys on this blog agree that Section 102 and Section 103 issues are very important in determining whether a claimed invention is “patentable,” but are irrelevant to the issue of “patent eligibility” under Section 101. Sections 102 and 103 are some of “conditions and requirements of this title” stated in Section 101 that must be met for a “patent eligible” claim to also be a “patentable” claim.
Wayne Borean
May 16, 2013 07:46 pm
@MarkG

As I stated, the only question that should be answered with respect to Section 101 is whether an invention is “a useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”

I’ve been ignoring Section 101 because the definition is so wide that it is really impossible to quantify. That’s why Sections 102 and 103 are so important in my opinion. They are where the limits on the definition are.

@ANON

Mind you, I do understand that hedging tendency all too well. The world of law is not immune to the ‘hedging effect,” especially in dealing with clients. There is another term for that: CYA.

Understand that I don’t really have a horse in this race. I’m “forcibly” retired since my body won’t allow me to work anymore. In other words I’m arguing this from an intellectual standpoint.

I do try to be polite. Quite frankly I’ve learned a lot from reading Gene’s posts, and while I tend not to agree with him based on my own experiences, I do understand what he is saying, and why he says it. I just happen to think he is misunderstanding the pressures of competition on innovation, and that it more than protection is what drives new and inventive products.

Wayne
MarkG
May 16, 2013 10:32 am
“Not at present. I think that the major issues are with 102 and 103. Clear them up, and 101 is probably OK.”
As Anon has noted, the issue in CLS is only 101 and the Supreme Court’s misguided attempts to try to insert 102 and 103 standards into Section 101.

As I stated, the only question that should be answered with respect to Section 101 is whether an invention is “a useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”

Furthermore, given the fact the Federal Circuit and Supreme Court have difficulty interpreting Section 101 in a rational manner makes it doubtful that they can interpret Section 103 in a rational manner. Section 101 should be a relatively easy test. Deciding whether something is “obvious” under Section 103 is much more difficult to determine.
Anon
May 16, 2013 07:15 am
Wayne,

You remind me of a certain adage: it is OK to be open -minded, but not so open-minded that your brain falls out.

You hedge too much, yet hold onto a particular viewpoint that the hedged foundation does not support.

Mind you, I do understand that hedging tendency all too well. The world of law is not immune to the ‘hedging effect,” especially in dealing with clients. There is another term for that: CYA.

One great thing about forums like this is that a client is not involved. One great thing about posting with a pseudonym, is that even tangential effects to clients can be eliminated. One not so great thing about this combination is that posts can come across a bit harsh, especially to those accustomed to hearing the softened version with the CYA and hedging.

In this artificial environment, free of CYA (but not free of hedging, it appears), the black and white of facts and laws does take on sharper edges. When that clarity is mucked up – and mucked up on purpose – this forum loses its benefit. We can have separate discussions on how tight 102/103 should be, but 101 is not – and should not – be a proxy for those legal requirements. That in part was the point of my post at 17. I think your seeing a difference and acknowledging this difference is a reason why Gene affords you more respect (across the board).

My requests (and admonitions) sound along the same lines. When you treat the law with respect, and treat the discussion of the law with logic, respect is accorded to you, and you have attention, and views will be listened to at a different level. Treat the law with disdain, employing circular logic and you only will garner enmity and a loss of respect. That, and the obvious holes in the ideology-driven position, will earn a vociferous attack on the mistreatment of law and facts, and the ideology suffers, rather than is advanced.
Wayne Borean
May 15, 2013 10:45 pm
Yes – but you are not aiming at 101 with that complaint, are you?

Not at present. I think that the major issues are with 102 and 103. Clear them up, and 101 is probably OK.

Yes, I know, I keep on hedging. I do political and corporate evaluations. You have to hedge what you say, because there will always be factors you aren’t aware of.

For example I’ve predicted Microsoft filing for Chapter 11 Bankruptcy Protection within a relatively short timespan. Everyone thinks I’m crazy. Problem is when you read their SEC filing, it definitely points to that possibility. About a years after I first published my conclusion, Business Week published something similar, though they didn’t go as far. Forbes followed them.

My prediction has a lot of hedge words, because while I know what I’m reading in the SEC 10Q and 10K reports, I have no idea what R&D projects Microsoft has in hand. I have no idea what employees they are grooming inside
the company for upper management roles. I have no idea if someone will have a strike of genius tomorrow and invent something that every customer wants, and is willing to pay for.

So I always hedge. I think this will happen if… Think being the operative word.

Wayne
Anon
May 15, 2013 10:20 pm
“My main complaint…”

Yes – but you are not aiming at 101 with that complaint, are you?
Wayne Borean
May 15, 2013 06:01 pm
Given that Congress has already narrowed the scope of what is patent eligible in Section 101 compared to Article 8, why should there be any further narrowing of patent eligibility due to “judicial exceptions”? Narrowing the scope of Section 101, as has been done by the Supreme Court seems to be a pretty clear case of the Court “legislating from the bench.”

The Constitution doesn’t require Congress to do anything the exact wording is:

The Congress shall have Power To

I’m suggesting you ask Gene to interpret the wording for you, since I doubt you’ll believe me. This is actually however a point that Gene and I are in broad agreement on. The Framers of your Comstitution didn’t want to lock Congress into taking certain acts that might not be good for the long term survival of the United States, so they set things up so that Congress could study the situation and pass laws according to what they determined was the best alternative. That could have been no Patent System.

If they had have wanted a Patent System set in stone the Framers would have used the word required instead of the word shall.

As to your other comment:

But the answers to both above questions should irrelevant to deciding whether an invention is “patent eligible” under Section 101. Section 102 takes care of novelty, i.e., whether the inention is “new”. Section 103 takes care of “inventive enough.”

To meet Section 101, an “invention” must only be “a useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof”

My main complaint about the U.S. Patent Office is its inability to research “inventions” to determine whether or not the are “novel” or “inventive enough”. Part of the problem might be funding, they just don’t have enough cash to hire all the examiners needed. Part might be restrictions on what the examiners can look at.

Take the Amazon “One Click” patent. I know of pre-existing software which does the same thing, which dates back to the late 1980’s. So why did the Patent get issued? Probably the Patent Office doesn’t know the software exists. It was at the time highly specialized, and I doubt many people knew about it, or understood what it did.

For that matter compare the U.S. Patent litigation landscape with the Canadian Patent litigation landscape.

Wayne
MarkG
May 15, 2013 06:59 am
I would also like to point out that Article 1, Section 8 of the Constitution on its face, would appear to allow mere “discoveries” and that Section 101 is already narrower than that Section 8 requires. Article 1, Section 8 is provided below:

“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Given that Congress has already narrowed the scope of what is patent eligible in Section 101 compared to Article 8, why should there be any further narrowing of patent eligibility due to “judicial exceptions”? Narrowing the scope of Section 101, as has been done by the Supreme Court seems to be a pretty clear case of the Court “legislating from the bench.”
MarkG
May 15, 2013 06:51 am
“I didn’t say it wasn’t an invention. I questioned whether it was a “patentable invention” which is a far different thing. At what point is something “inventive” enough to qualify for a patent?”

“What is a patentable invention? Not what is an invention. What makes an invention worthy of having a patent issued of it, under Section 8 of the Constitution?”

But the answers to both above questions should irrelevant to deciding whether an invention is “patent eligible” under Section 101. Section 102 takes care of novelty, i.e., whether the inention is “new”. Section 103 takes care of “inventive enough.”

To meet Section 101, an “invention” must only be “a useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof”
Wayne Borean
May 14, 2013 09:09 pm
At some level, there is nothing except pre-existing things.

Does “invention” even have a meaning for you?

I didn’t say it wasn’t an invention. I questioned whether it was a “patentable invention” which is a far different thing. At what point is something “inventive” enough to qualify for a patent?

I think that is the real question we are addressing. All the bovine excrement about mathematics means nothing. If I go deep enough I can describe Gene Quinn using math. It would be an exceptionally complex set of equations taking into account the layout of DNA, RNA, elemental poisons, his last meal, etc. but it could be done, just like we now model new automobiles using advanced CAD systems that would make Henry Ford drop dead from shock using advanced math.

Forget the math. It is a side issue.

What is a patentable invention? Not what is an invention. What makes an invention worthy of having a patent issued of it, under Section 8 of the Constitution?

Wayne
Anon
May 14, 2013 08:06 pm
Wayne,

At some level, there is nothing except pre-existing things.

Does “invention” even have a meaning for you?
Wayne Borean
May 14, 2013 07:18 pm
How can “just” speeding something up not be eligible for patentabiliy? From a common sense perspective it is ridiculous. If one takes the big picture in these arguments, then all of the 101 arguments are ridiculous.

What’s special about taking two pre-existing things, and combining them? You take a trading method, and combine it with a computer. You take a rubber curing method, and combine it with a computer. You take a fuel-air ratio control system and combine it with a computer.

Where is the invention?

Wayne
NWPA
May 14, 2013 05:32 pm
>>As to a Shadow Credit Record and Shadow Debit Record both could created the way that the old time loan >>sharks did it, using either their memory, or notes on slips of paper.

This may be true in which case it should have been a 102/103 issue.

How can “just” speeding something up not be eligible for patentabiliy? From a common sense perspective it is ridiculous. If one takes the big picture in these arguments, then all of the 101 arguments are ridiculous.

Just imagine a machine sitting there working. A block box. If what that machine is doing is something you think should be eligible for a patent, then move on to 102, 103, 112.

The absurdity of most of these arguments is for the SCOTUS or Fed. Cir. to say that something is abstract and so well known that you cannot be eligible for 101. Well, isn’t that a 102/103 argument?

If I file a patent for steel, is that not eligible under 101?
Wayne Borean
May 14, 2013 04:12 pm
Gene,

I’m going to attempt a translation of the State Street patent.

A data processing system for managing a financial services configuration of a portfolio established as a partnership, each partner being one of a plurality of funds, comprising:

(a) a group of clerks for processing data;

(b) filing cabinets and card file systems for storing data on a storage medium, either letters or index cards, all of which are stored in a fire safe and theft safe security vault with easy access devices such as ladders and sliding cabinets as part of the vault design

(c) first means for initializing the storage medium by having the senior clerk unlock the storage vault at the start of the work day

(d) second means for processing data regarding assets in the portfolio and each of the funds from a previous day and data regarding increases or decreases in each of the funds, assets and for allocating the percentage share that each fund holds in the portfolio by use of ledgers which hold the totals of each customer’s trades;

(e) third means for processing data regarding daily incremental income, expenses, and net realized gain or loss for the portfolio and for allocating such data among each fund by use of pencils, paper, and abacuses;

(f) fourth means for processing data regarding daily net unrealized gain or loss for the portfolio and for allocating such data among each fund by use of pencils, paper, and abacuses; and

(g) fifth means for processing data regarding aggregate year-end income, expenses, and capital gain or loss for the portfolio and each of the funds with the clerks updating all of the ledgers, and hand printing statements for each customer.

My point being that the computer can be factored out of the equation. Using a computer is far more convenient, allows for faster updates, more granularity, lower labor costs, etc., but all of those factors are obvious to anyone who has ever seen computerization at work.

Not many people know why NASA went metric, while the rest of the United States Government stayed on the Imperial system of measurement. The answer is quite simple. Computing power in the 1960s was quite limited. When calculating the Moon shots, NASA saved a fortune in computing time by using the metric system. Had they waited twenty years, when more powerful computers were available, going metric wouldn’t have been an issue.

Now, if you look at Diehr and Lutton, the same thing can be seen. By having a mechanical alarm, and an employee on site to respond, you don’t need the computer. It is cheaper to use the computer, and generally more reliable once it is setup properly, because a computer doesn’t take bathroom breaks, or fall asleep.

As to a Shadow Credit Record and Shadow Debit Record both could created the way that the old time loan sharks did it, using either their memory, or notes on slips of paper.

Wayne
NWPA
May 14, 2013 12:44 pm
@Gene: Benson.
Gene Quinn
May 14, 2013 12:34 pm
@Jodi-

I suppose “transaction” could and probably should impart some level of tangibility to the claim. It would at a minimum mean that the claim steps could not be performed within the mind of an individual, so it isn’t a purely mental process.

I would have been most comfortable with the Newman, Linn and O’Malley positions on this issue. I can understand CJ Rader and Judge Moore though. I think any fair reading of the claims and the specification (not to mention the admissions during Markman and at oral argument) tether these claims neatly to a machine. These claims satisfy the machine-or-transformation test in my opinion and I’m not familiar with a situation where claims that do satisfy that test have been held nevertheless patent ineligible.

-Gene
MarkG
May 14, 2013 10:23 am
“I am tempted to give the Fed. Cir. some slack. Trying to make sense of what the Supremes are force-feeding them, particularly in the field of what is patent-eligible, will inevitably result in gibberish.”

No question the Supreme Court has bungled the handling of what is patent eligible. Nevertheless, if the Federal Circuit effectively creates a “balancing test” for patent eligibility (balancing language that makes the claim patent eligible against language that does not making the claim patent eligible), it won’t just be the software and biotech claims that will be attacked for patent eligibility on a regular basis.

For example, if you write a method claim for a synthetic process that includes one or more steps that involve the boiling point of one or more compounds and/or the solubility of one or more compounds in a particular solvent, under a “balancing test” rule, those steps could “count against” the patent eligibility of your claim.

From the CLS decision:

“Whether a particular claim satisfies the § 101 standard will vary based on the balance of factors at play in each case, and the fact that there is no easy bright-line test simply emphasizes the need for the PTO and the courts to apply the flexible analysis above to the facts at hand.”

Such a standard, effectively puts § 101 in play in virtually any claim in which any element or step in the claim might be considered to be non-patent eligible subject matter. Why? The patent ineligible element or step could theoretically balance the claim in favor of finding the claim to be patent ineligible.

Whatever the line for patent eligibility is, patent eligibility should be based on there being enough in the claim to cross the threshold of making the claim be patent eligible. As soon as you begin balancing the supposed patent ineligible subject matter in a claim against the patent eligible subject matter to determine whether it meets the standards of § 101, you end up with a standard that will be a real burden on Examiners and that will allow many types of claims besides software, business method and biotech claims, to be challenged for patent eligibility.
American Cowboy
May 14, 2013 09:03 am
I am tempted to give the Fed. Cir. some slack. Trying to make sense of what the Supremes are force-feeding them, particularly in the field of what is patent-eligible, will inevitably result in gibberish.
John Smith
May 13, 2013 10:47 pm
Gene,

It appears that the claims of State Street that you quoted use means plus function language to import actual structural features into the claims. In contrast it appears that the claims in the instant case do not use means plus function language and instead simply recite generic computers along with some functional language stipulating the method steps that were carried out in the other patents.

Or at least that’s what it looks like.

John
Jodi
May 13, 2013 06:43 pm
Gene,

While perhaps not on record (?), but in ‘479 Claim 33, wouldn’t “transaction” also be considered tangible structure?
MarkG
May 13, 2013 05:34 pm
Gene,

To further bolster your point about Claim 33 claiming patent eligible subject matter, let’s assume the contrary, i.e., that Claim 33 does not claim patent ineligible subject matter.

Let’s say you have a claim, Claim 1 for the purposes of discussion, for a new type of computer and everyone agrees that the computer is a machine that is patent eligible and is new and nonobvious.

Now you also have a dependent claim, Claim 2, that is essentially identical to Claim 33 of the ‘479 patent in CLS, except it states, “The computer of caim 1, wherein the computer includes means for implementing a method of exchangin obligations . . . [the remaining part of the claim as in Claim 33]..

1. Does Claim 2 claim patent ineligible subject matter if Claim 33 is considered to be patent ineligible subject matter under CLS?

2. What if instead of being part of dependent Claim 2, I added the “wherein clause” of Claim 2 to Claim 1, Does the patent ineligible wherein clause “taint” my otherwise patent eligible and patentable computer claim and make it both patent ineligible and unpatentable?

3. If we agree that the addition of this wherein clause to a claim for a new type of computer should not make the claim a claim for patent ineligible subject matter, why would such a claim be a claim for patent ineligible subject matter if the claim did not specify the type of computer, i.e., the claim could cover an existing computer having means to implement the method of the wherein clause?

Similar reasoning could be applied to a “Claim 1” for a new type of storage medium that implements the method of Claim 33.

So, now, with respect to Claim 33 itself, as you have pointed out, method claims implemented by computers have been considered to be patent eligible subject matter, even if they include abstract concepts. So given this, why should Claim 33 be treated differently than my hypothetical claims to a new type of computer or a new type of storage device that includes the subject matter of Claim 33 as a wherein clause?

Is a method claims more vulnerable to being “tainted” by an abstract concept and becoming patent ineligible than a computer or storage device claim is? Is there some type of balancing test implicit in Section 101 that an Examiner is supposed to weigh the degree of “taint” due to abstract subject matter being present in the claim against the “patent eligibileness” of the rest of the claim?

Effectively, some of the judges of the CAFC seem to be arguing for such a balancing test for patent eligibility under Section 101, and I don’t see how that is supported by the way that Section 1 was understood by the courts for over 40 years (i.e., through at least State Street Bank).

Similar questions
NWPA
May 13, 2013 01:43 pm
Actually, since the method claims were stipulated to require a computer, maybe the method claims follow the same analysis you provide above for the system claims.