Following in the footsteps of Bilski, CLS Bank, and Ultramercial, another case on subject matter eligibility was decided by the US Court of Appeals for the Federal Circuit last Thursday. The court's opinion, delivered by Judge Lourie, and the dissenting opinion, filed by Chief Judge Rader, show that there is still significant disagreement on the rules to be applied when evaluating abstractness in light of the substantial limitations embedded in claims.
In 2007, Accenture sued Guidewire alleging infringement of US Patent 7,013,284, which describes a computer program for handling insurance related tasks, comprising several software components for storing and manipulating data, enabling their transmission and receipt, and managing program events. In particular, claim 1 discloses a system for generating and assigning the tasks to be performed in an insurance organisation when a specific event happens, and claim 8 describes a method that has the same objective and employs many of the same software components.
The defendant argued that Accenture's patent embodied abstract ideas which failed the machine-or-transformation test. The District Court for the District of Delaware agreed, finding that the patent was 'directed to concepts for organizing data rather than to specific devices or systems, and [that] limiting the claims to the insurance industry does not specify the claims sufficiently to allow for their survival'. The court found that method claim 8 was patent-ineligible, as the limitations contained therein did not restrict it to a concrete application of the abstract idea. Consequently, it held that system claim 1, which closely resembled claim 8, was equally patent-ineligible.
On appeal, Accenture challenged the District Court's conclusions on system claims 1-7, but did not appeal the findings concerning claim 8 and the related method claims. The Federal Circuit affirmed the District Court's decision.
The majority first noted that, in order to evaluate abstractness, it is necessary to determine whether a claim preempts an abstract idea. To this aim, under Ultramercial's two-step process, the court should identify the fundamental concept wrapped up in the claim, and assess whether there are substantive limitations which restrict it to an application, in such a way that it does not cover the full abstract idea.
The court recalled CLS Bank, explaining that '[a]lthough CLS Bank issued as a plurality opinion, in that case a majority of the court held that system claims that closely track method claims and are grounded by the same meaningful limitations will generally rise and fall together'. The judges analysed the limitations contained in system claim 1 and method claim 8, finding that they required performance of the same basic process, and contained only minor differences in terminology, to the effect that both claims 'should rise or fall together'. Accordingly, in light of the District Court's unchallenged findings of invalidity on method claim 8, the court affirmed the patent-ineligibility of all system claims.
The decision also found that the system claims were ineligible for patenting irrespective of the status of the method claims. The majority argued that system claim 1 referred to an abstract concept ('generating tasks [based on] rules...to be completed upon the occurrence of an event'), providing only two limitations: its application in a computer environment and within the insurance industry. These limitations, according to the court, were insufficient to avoid preempting the abstract idea of system claim 1. Citing Bancorp, the judgment clarified that 'the complexity of the implementing software or the level of detail in the specification does not transform a claim reciting only an abstract concept into a patent-eligible system or method'.
In his dissenting opinion, Judge Rader questioned the majority's reliance on CLS Bank ('no part of CLS Bank, including the plurality opinion, carries the weight of precedent'), and contested its application, noting that both CLS Bank and Ultramercial actually endorsed the evaluation of eligible subject matter on a claim-by-claim basis. Further, Judge Rader argued that the system described in the patent 'does not preempt anything beyond the specific claims, let alone a broad and undefined concept', observing that it would be possible to rely on various non-infringing methods to generate tasks based on rules to be completed upon the occurrence of an event. Concluding his dissenting opinion, the judge touched the heart of the issue that the Federal Circuit hasn't still settled:
In conclusion, I note that prior to granting en banc review in CLS Bank, this court commented: “no one understands what makes an idea abstract.” [CLS Bank Int’l v. Alice Corp.] After CLS Bank, nothing has changed. “Our opinions spend page after page revisiting our cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter.” [MySpace, Inc. v. GraphOn Corp.] Indeed, deciding what makes an idea “abstract” is “reminiscent of the oenologists trying to describe a new wine.” [MySpace, Inc. v. GraphOn Corp.]