The Software IP Report

Another Post-Alice Nail in the Coffin of Business Method Patents

By Charles Bieneman

Categories: Patent Eligibility, Software Patents, The Software IP Report

In a case where the patent-owner had no chance following Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014), the Federal Circuit has affirmed a district court’s pre-Alice holding that patent claims directed to “providing a guaranty service for online transactions” are not patent-eligible under 35 U.S.C. § 101Buysafe, Inc. v. Google Inc., No. 2013-1575 (Fed. Cir. Sept. 3, 2014).

The Federal Circuit focused its analysis on method claim 1 of the patent at issue, U.S. 7,644,019 (reproduced in this post), the parties having agreed that the analysis of method claims would be applied to computer-readable medium claims.  Concluding that claim 1 implicated the “abstract idea” category of subject matter excluded from patent eligibility, the Court turned to analyzing “two aspects” of Supreme Court precedent:

what type of matter the Court has held to come within the category of “abstract idea”; and what invocations of a computer in a claim that involves such an abstract idea are insufficient to pass the test of an inventive concept in the application of such an idea.

Concerning the issue of whether claimed subject matter was an “abstract idea,” the court turned to cases such as Bilski v. Kappos finding “an abstract idea in certain arrangements involving contractual relations, which are intangible entities.”  Although acknowledging that Bilski did not create a general rule that business methods are unpatentable, the court thought that the claims here, like those in Bilski, were directed to a “fundamental economic practice” that, without more, could not pass the patent-eligibility bar.

In Alice, the Supreme Court had clearly explained that merely using a computer to store electronic records did not confer patent-eligibility.  Based on “the new Supreme Court authority in this delicate area, and the simplicity of the present case under that authority,” the Federal Circuit sought no need to revisit its own precedent.  The claims here did “not push or even test the boundaries of the Supreme Court precedents under section 101.”

In a now-familiar coda, the Court amplified that:

The claims’ invocation of computers adds no inventive concept. The computer functionality is generic—indeed, quite limited: a computer receives a request for a guarantee and transmits an offer of guarantee in return. There is no further detail. That a computer receives and sends the information over a network—with no further specification— is not even arguably inventive. The computers in Alice were receiving and sending information over networks connecting the intermediary to the other institutions involved, and the Court found the claimed role of the computers insufficient.