The Software IP Report

Insurance Business Method Claims Held Not to Recite Patent-Eligible Subject Matter

By Charles Bieneman

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

Patent claims directed to “a system for generating tasks to be performed in an insurance organization” do not recite patent-eligible subject matter under 35 U.S.C. § 101, according to a divided Federal Circuit panel. Accenture Global Services GmbH v. Guidewire Software, Inc., No. 2011-1486 (Fed. Cir. Sept. 5, 2013). Accordingly, in an opinion authored by Judge Lourie and joined by Judge Reyna, the court affirmed the district court’s summary judgment of invalidity in favor of Guidewire; Chief Judge Rader wrote in dissent.

Procedural Background

The district court had held claims 1-22 of U.S. Patent No. 7,013,284 invalid for reciting patent-ineligible subject matter. Accenture had filed this patent infringement lawsuit in December 2007, but the district court granted Guidewire’s summary judgment motion only after the Supreme Court’s decision in Bilski v. Kappos. Accenture then appealed the district court’s holding only with respect to system claims 1-7, “but did not appeal the similar method claims 8-22.” (Nonetheless, as discussed below, the court held that one basis for invalidating the system claims was that these claims recited the same subject matter, and thus were invalid for the same reasons as, the method claims.)

Majority Opinion

The court’s discussion of the law began by stating that the plurality opinion in the recent CLS Bank case “identified a two-step process, derived from the Supreme Court’s decision in [Mayo v. Prometheus] for analyzing patent eligibility under § 101.” The first step is to identify whether one of Section 101’s four statutory classes describe the claimed invention. The second step is to “assess whether any of the judicially recognized exceptions to subject-matter eligibility apply, including whether the claims are to patent-ineligible abstract ideas.” Again citing the Supreme Court’s Mayo decision, Judge Lourie stated that abstractedness required determining whether a patent claim preempts an abstract idea, which in turn requires identifying “whatever fundamental concept appears wrapped up in the claim.”

Judge Lourie further stated that even though “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.” Accordingly, because the system claims here offered “no meaningful limitations beyond the method claims that have been held patent-ineligible” those claims were also patent-ineligible. Moreover, the system claims, “when considered on their own . . . fail to pass muster.”

The court made relatively easy work of comparing the method claims to the system claims. Although the system claims recited components not explicitly called out in the method claims, the court compared the independent system and method claims element by element to show that the method claims in fact used and relied on the components recited in the system claims. Further, the patent specification made little distinction between system and method claims. While the patent-ineligibility of method claims did not always render “related system claims . . . patent-ineligible,” nonetheless “when they exist in the same patent and are shown to contain insignificant meaningful limitations, the conclusion of ineligibility is inescapable.”

Further, when analyzed on their own, the system claims were patent-ineligible “because they fail to include limitations that set them apart from the abstract idea of handling insurance-related information.” Accenture had argued that the system claims were distinguishable from CLS Bank, and that their patentability was supported by the Federal Circuit’s recent holding that claims were patent-eligible in its Ultramercial decision.

The majority disagreed, explaining that “at the heart of system claim 1” was “the abstract idea” of “generating tasks [based on] rules . . . to be completed upon the occurrence of an event.” In Ultramercial, the claims “contained additional limitations from the abstract idea of advertising as currency, such as limiting the transaction to an Internet website, offering free access conditioned on viewing a sponsor message, and only applying to a media product.” Here, system claim 1 was “similar to the patent-ineligible system claim from CLS Bank.” The claim there simply recited general computer components “that received transactions, adjusted variables in the data storage unit, and generated instructions.”

Also, the procedural posture here, involving an appeal from a summary judgment, was different than in Ultramercial, which was an appeal of a motion to dismiss. In this case, claim construction and discovery had been completed, and Accenture did not point to errors in the lower court proceedings.

Judge Rader’s Dissent

Judge Rader dissented, noting that any claim could be stripped down to an abstract idea at its core. Judge Rader further objected to what he characterized as the majority position “that Accenture’s failure to appeal the invalidation of the method claims estops it from arguing that the elements contained therein (and shared by the system claims) are directed to patent-eligible subject matter.” According to Judge Rader, a majority of the CLS Bank court had held that associated system and method claims need not all “suffer the same fate.”

Judge Rader would have held that the system claims here were patent-eligible. In his view, the claims recited “a specific combination of computer components, including an insurance transaction database, a task library database, a client component, and a server component that includes an event processor, task engine, and task assistant.” Judge Rader identified a number of ways by which someone could “generate tasks based on rules to be completed upon the occurrence of an event” and not infringe the claims. Looking at the details of the claims, Judge Rader concluded that “this system does not preempt anything beyond the specific claims, let alone a broad an undefined concept.”