Oral Arguments in CLS Bank Give Hope to Both Sides

The Court of Appeals for the Federal Circuit recently heard oral arguments for the en banc rehearing of CLS Bank v. Alice Corp.  The questions to be focused on pertained to a test for determining when computer implemented inventions are abstract ideas and whether the form of the claim (method, system, or storage medium) was relevant to eligibility under Section 101.  Based on the oral arguments, it appears that some Judges would be uncomfortable declaring claims that recite systems as ineligible subject matter under Section 101.  However, the Judges seemed more receptive to the idea that method claims of computer implemented inventions could be ineligible.  The following is a synopsis of the arguments and comments from the hearing:

Arguing for CLS, Mr. Perry asserted that the claimed methods in Alice’s patents are abstract ideas and the tangible elements (computer) were added solely for the purpose of passing the eligibility requirement at the time.  In other words, the computer is neutral to the claims and does not add enough for the claim to be to significantly more than an abstract idea.  He also asserted that the patent was issued under the wrong standard of review at the PTO.

Judge Moore stated that this reasoning is difficult to apply to the system claims at issue.  She believes that adding a limitation to a computer system should not render the claim ineligible under Section 101.  She also stated that the specification included how to configure a computer to perform the claimed methods.

CLS asserts that the claims of the Alice patents are not to software inventions at all.    This is evidenced by the fact that the methods claimed can be performed using pencil and paper, without a computer.  CLS emphasized that Alice has not written a program to perform the methods and does not sell a product that perform the methods.  CLS categorized Alice’s claims as business methods where a general computer is simply added to attain eligibility under Section 101.

Arguing for Alice, Mr. Perlman asserted that Alice has not claimed an abstract idea, but a specific way of using a computer to exchange obligations using a computer.  He also asserted that even without the computer implementation, the claimed methods would be eligible under Section 101.  Alice’s claims require the use of a specially configured computer and Alice asserts that the specification of its patents instruct how to configure a computer to perform the methods that are claimed.

Alice thinks the test should be: the claim, with all its limitations, taken as a whole, must be to significantly more than just the abstract idea.  As applied to the computer context: the computer must play a significant role in permitting the claimed invention to be performed and not simply there to increase speed or print a result.

Some Judges were interested as to whether end of the day netting can be performed without infringing Alice’s claim.  This line of questioning was pursued to determine whether Alice claimed the only way of performing end of the day netting, which would suggest the claims at issue were not as specific as Alice seemed to assert.

Arguing for the United States, Mr. Kelley asserted that simply adding a general purpose computer to an abstract idea should not result in the claim being eligible subject matter under Section 101.  He also asserted that the process of determining eligibility under Section 101 must include an analysis of the function of the computer in the claimed method.  He suggested investigation into whether the method is separable from the system as a possible avenue to pursue.

This post prepared with assistance from Kyle Helgemoe.

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