Post-Alice Corp. Decisions Show Increased Trend Of Courts Invalidating Computerized Business Method Patents

Previously, we reported on the US Supreme Court's decision in Alice Corp. v. CLS Bank International, 573__ U.S. 2014, which held that certain systems and methods of exchanging financial obligations — even if implemented in hardware or software — did not qualify for patent protection because they fell within the "abstract" ideas exception to patent eligibility under 35 U.S.C. § 101. As we predicted, since this decision, a number of courts have followed suit and have issued decisions similarly invalidating claims based on unpatentable subject matter. Here we highlight and summarize two recent decisions demonstrating an increased activity towards invalidation of business method claims implemented on computers.

Buysafe, Inc. v. Google, Case No. 2012-1575 (Fed. Cir. Sept. 3, 2014)

BuySAFE is the owner of US Patent No. 7,644,019, which claims methods and machine-readable media encoded to perform steps for guaranteeing a party's performance of its online transaction. BuySAFE sued Google for patent infringement in the District of Delaware, and Google moved for judgment on the pleadings, arguing that the asserted claims are invalid under 35 U.S.C. § 101. The asserted claims are directed towards methods of processing and guaranteeing a transaction between two entities using computers over a network. After the District Court granted Google's motion for judgment on the pleadings, finding that the asserted claims were invalid under §101, BuySAFE appealed to the Federal Circuit.

The Federal Circuit applied a two-part test to determine whether the claims included patent-eligible subject matter. First, the Court analyzed whether the claimed subject matter fell within one of the three exceptions to patent eligibility — that is, whether the claims covered abstract ideas, laws of nature, or natural phenomenon. Using the Supreme Court's decision in Bilski v. Kappos, 561 U.S. 593 (2010) as a proxy, the Court reasoned that like Biliski the claims at issue involved essentially financial transactions between two entities which in theory could be applied without computers. Next, the Court considered whether the addition of computers to the claim made the claim sufficiently technical to remove it from the realm of an "abstract" concept. Relying on Alice Corp., the Court found that the computer functionality in the claims was generic and merely took the abstract concept of guaranteeing a contractual relationship into the realm of the Internet, which was not...