Oral Argument In CLS Bank: Redefining Patent Eligibility For Computer-Related Inventions?

On February 8, 2013, the Federal Circuit, sitting en banc, heard oral arguments in CLS Bank International v. Alice Corporation Pty. Ltd., No. 2011-1301, which vacated a panel opinion from the Federal Circuit, CLS Bank Int'l v. Alice Corp., 685 F.3d 1341 (Fed. Cir. 2012), vacated, 484 Fed. Appx. 559. The current appeal arises from a grant of summary judgment from the U.S. District Court for the District of Columbia that the asserted claims of Alice Corporation's (Alice) patents are invalid for failing to claim patent-eligible subject matter under 35 U.S.C. § 101, CLS Bank Int'l v. Alice Corp., 768 F. Supp. 2d 221 (D.D.C. 2011).

Questions during oral argument highlighted a sharp schism in the Court over the test and perspective for the patent eligibility of computer-implemented inventions. The judges focused on several issues, including the extent to which claim limitations drawn to generic computer hardware affect patent eligibility; the extent to which recitation of a process, system, or computer-readable media affect patent eligibity; whether to consider the broader inventive concept embodied by the claims; and what the definition of an abstract idea is. For example, counsel for CLS Bank International (CLS Bank) was repeatedly questioned by Judge Kimberly Moore about whether certain claims reciting specific computer hardware were merely abstract ideas. Counsel for Alice was questioned by Judge Timothy Dyk about whether the claims would foreclose all implementation of the end-of-the-day netting method embodied by the claims. Based on the division in the questioning, it is possible that the Court's en banc opinion may be divided and could result in concurring and/or dissenting opinions.

While the Federal Circuit's decision is likely to provide additional guidance beyond the patent-eligibility decisions in Bilski and Mayo, further resolution may need to come from the U.S. Supreme Court. (For a more detailed analysis of the Bilski decision, see Foley's Legal News Alert here, and for a more detailed analysis of the Mayo decision, see Foley's PharmaPatents article here and Personalized Medicine Bulletin here.)

The Case to Date

Alice is the owner of several U.S. patents that relate to methods, systems, and computer products for utilizing a trusted exchange institution to reduce settlement risk when parties are exchanging obligations. CLS Bank operates in the foreign exchange market and operates a global multicurrency cash settlement system that...