The Software IP Report

Patent-Eligibility Decision Considers CLS Bank and Bancorp

By Charles Bieneman

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

In denying the plaintiff’s request for reconsideration of summary judgment of invalidity under 35 U.S.C. § 101, the Court in Digitech Information Systems, Inc. v. BMW Financial Services NA, LLC, No. 6:10-cv-1373 (M.D. Fla. July 30, 3012), compared the claim at issue to the claims held not patent-eligible in the Federal Circuit’s recent decision in Bancorp Services, LLC. v. Sun Life Assur. Co., and distinguished the claim at issue from the claims that were held patent-eligible in CLS Bank Int’l. v. Alice Corp.

As stated above, claims of U.S. Patent No. 7,739,180 had been previously held not to recite patentable subject matter.    (A representative claim is reproduced here.)  The plaintiff set forth two arguments for reconsideration.  First, new evidence supposedly showed that the patent claims survived the machine-or-transformation test.  Second, the requirement, articulated in CLS Bank, that an abstract idea be “manifestly evident” supposedly made the claims here patentable.  The court rejected both of these arguments.

What the plaintiff characterized as new evidence (information included in excerpts from depositions and an expert report) in fact simply reiterated that the preferred embodiment of the claimed invention “would not be practical without the use of a computer.”  This was not “new evidence,” because the court considered this fact in making its original summary judgment ruling.

Further, not only was there no indication that the preferred computer embodiment should be read as a limitation on the claim as a whole, but the Specification flatly indicated to the contrary.  Moreover, transforming leases into lease-backed securities was simply a transformation of legal relationships, and failed the transformation prong of the machine-or-transformation test.

The court then turned to the abstract idea test, which it had to do because the machine-or-transformation test by itself was not dispositive.  After rejecting the plaintiff’s argument that it had improperly overlooked a certain claim element, the court considered the plaintiff’s argument that the CLS Bank case should alter its result.  The CLS Bank case did not set forth any new standard, and, unlike here, the parties there had agreed that a computer was necessary to practice the claims.  Further, the CLS Bank court concluded that the claims there “were limited, by their terms, to ‘a very specific application’ of the concepts they recited.”

The Bancorp case, on the other hand, which came only four days before the instant decision, and must have come after briefing was complete, presented claims that the court thought were much more similar to the claims here.  The Bancorp claims, like the present claims, did not satisfy the machine-or-transformation test, nor were the claims here, like the claims there, “directed to a ‘very specific application’ of the inventive concept.”

The court concluded that:

In sum, CLS Bank does not constitute a change in the law, and its application does not alter the“abstract idea” analysis set forth in this Court’s summary judgment Order.  Additionally, the analysis set forth in Bancorp supports this Court’s conclusion that the claims at issue in this case–when the limitations of these claims are viewed as a whole–attempt to claim a patent-ineligible abstract idea.

Because the context here is a reconsideration of a motion for summary judgment of Section 101 invalidity that had already been granted, this case is perhaps not as instructive as it might be concerning how district courts will approach patent-eligibility analyses in the wake of the Federal Circuit’s most recent Section 101 decisions.  Nonetheless, it seems fair to assume that the viability of a Section 101 invalidity defense remains strong when business method claims are asserted.  More than that, it is no attack on the present court’s reasoning to state that the one thing that remains clear is that litigants looking for clarity and predictability in patent-eligibility analyses will continue to be disappointed.