United States: The Saga Of Patent Eligibility Of Business Methods Continues In SmartGene v. ABL

We reported in the last edition that the U.S. Supreme Court had agreed to consider the case of Alice Corp. Pty. Ltd. v. CLS Bank International (No. 13-298) regarding patent-eligible subject matter.  The CLS Bank decision was covered in the June 2013 edition of Full Disclosure.  Click here.  Oral arguments are scheduled for March 31, 2014, with a decision expected in the early summer.

As readers of Full Disclosure know, the en banc decision in CLS Bank International v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013) (en banc), failed to clarify the boundaries of patent eligibility for U.S. applicants.  If the fractured decision has any value, it is in providing interesting clues to how individual Federal Circuit judges view the question of patent eligibility.  It is hoped that when the Supreme Court opines on 35 U.S.C. § 101 this time, it will impart some predictability to the patent-eligibility analysis.

The recent decision in SmartGene, Inc. v. Advanced Biological Laboratories, SA, No. 2013-1186 (Fed. Cir. Jan. 24, 2014) (unpublished), is nonprecedential but is nevertheless interesting because the opinion was authored by Circuit Judge Richard Taranto, who joined the Federal Circuit in 2013 but did not participate in the CLS Bank decision.

Judge Taranto was joined in his opinion in SmartGene by Judges Lourie and Dyk.  Judge Lourie, joined by Judge Dyk and three other judges, wrote a concurring opinion in CLS Bank affirming the district court's holding that all claims were patent ineligible under 35 U.S.C. § 101. 

In CLS Bank, Judge Lourie evaluated Supreme Court decisions and proposed an "integrated approach" to § 101 questions based on three themes appearing in those precedents:  1) patents should not preempt fundamental tools of discovery by claiming a natural law, natural phenomenon, or abstract idea; 2) the substance of a claim is more important than its form in determining patent eligibility; and 3) courts should avoid rigid rules regarding subject-matter eligibility.  Based on these themes, Judge Lourie proposed a four-step "integrated" approach:

  1. Verify that the claim fits into one of the four statutory classes of invention (process, machine, manufacture, or composition of matter);
  2. Determine whether the claim raises § 101 abstraction concerns at all;
  3. If abstraction concerns arise, unambiguously identify the fundamental concept or abstract idea; and  
  4. After identification of the abstract idea, evaluate the remainder of the claim to determine whether it contains an "inventive concept" in the form of a "genuine human contribution" above and beyond the involved abstract idea.

Lourie then applied this approach and found all the method claims patent ineligible under § 101.  For the method claims in question, Judge Lourie found that the requirement to implement the method through a computer failed to supply an "inventive concept" because it did no more than add generic computer functionality to make the processing faster.  Judge Lourie similarly found the system claims invalid, as they only served to limit the method to a particular technological environment, which was not enough to satisfy § 101.  Judge Lourie's opinion found, at least in this case, that the method and system claims should "rise or fall" together, so that the substance of a claim controls its eligibility under § 101, rather than how artfully it was drafted.

The decision in SmartGene reveals a similar approach by Judge Taranto in holding all of the claims as patent ineligible under § 101.  Judge Taranto had no problem identifying the fundamental concept of the claims: the claims were directed to an expert system including a method and system for proposing treatment options for a patient based on a consultation of three separate databases.  The claims were written in generic terms to include "providing" patient information to a "computing device" and "generating" a ranked list of treatment options.  Judge Taranto, without formulating a specific approach, appeared to follow the same analytical framework advocated by Judge Lourie in CLS Bank.  Beginning with the question of whether SmartGene's patent contained an inventive concept, Judge Taranto noted that "[t]he claim . . . calls on a computer to do nothing that is even arguably an advance in physical implementations of routine mental information-comparison and rule-application processes.  In this context, the concern about preempting public use of certain kinds of knowledge, emphasized in Mayo, is a grave one."  SmartGene, slip op. at 9-10.  Following the Supreme Court's precedents, Judge Taranto—as did Judge Lourie in CLS Bank—found that the claims did no more than recite a "computing device," with basic functionality "to do what doctors do routinely."  Id. at 8.  Judge Taranto went on to complain that the only independent claim placed "only very broad limitations on a 'computing device'" that rendered it like a doctor's mind, and not like any specific technological implementation.  Id. at 8-9.

It is tempting to speculate what the result in CLS Bank would have been had Judge Taranto participated in the en banc decision.  It should be recalled that Judge Taranto recently joined the Federal Circuit from a private law practice, as opposed to another judicial position, so some might argue that his analyses could be more in line with Supreme Court precedent.  Ultimately, however, that would be an academic exercise, because the Supreme Court will have the next opportunity to rule on the CLS Bank matter.  However, anyone attempting to "read the tea leaves" here should remember that the Supreme Court is not predictable on this patent-eligibility issue.  One need only recall the Supreme Court's decision in Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218 (2010), which ushered in the current era of unpredictability following the predictable laissez-faire era following State Street Bank & Trust v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).

In order to conform to the plurality in the CLS Bank decision, patent prosecutors should draft patent specifications and claims that include both method and system claims where appropriate.  Ultimately, however, claims should be drafted to recite more than merely implementing a method through a computer, such as the ABL claims found invalid in this decision.  The claims more likely to succeed under any analysis are those that cover more than simply a process that takes place with a computer which accomplishes something that is conventionally done without a computer.  The better approach is to recite a computer-implemented method in only a portion of the claim and then recite further process steps that employ the results of the computer-implemented method to accomplish some specific, real-world task.  Of course, it is important to keep in mind the joint-infringement implications when doing so.  See a discussion on the latter here.

We invite our readership to stay tuned to Full Disclosure for analyses of CLS Bank and other Supreme Court decisions as they are handed down.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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