The Saga Of Patent Eligibility Of Business Methods Continues In SmartGene v. ABL

We reported in the last edition that the U.S. Supreme Court had agreed to consider the case of Alice Corp. Pty. Ltd. v. CLS Bank International (No. 13-298) regarding patent-eligible subject matter. The CLS Bank decision was covered in the June 2013 edition of Full Disclosure. Click here. Oral arguments are scheduled for March 31, 2014, with a decision expected in the early summer.

As readers of Full Disclosure know, the en banc decision in CLS Bank International v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013) (en banc), failed to clarify the boundaries of patent eligibility for U.S. applicants. If the fractured decision has any value, it is in providing interesting clues to how individual Federal Circuit judges view the question of patent eligibility. It is hoped that when the Supreme Court opines on 35 U.S.C. § 101 this time, it will impart some predictability to the patent-eligibility analysis.

The recent decision in SmartGene, Inc. v. Advanced Biological Laboratories, SA, No. 2013-1186 (Fed. Cir. Jan. 24, 2014) (unpublished), is nonprecedential but is nevertheless interesting because the opinion was authored by Circuit Judge Richard Taranto, who joined the Federal Circuit in 2013 but did not participate in the CLS Bank decision.

Judge Taranto was joined in his opinion in SmartGene by Judges Lourie and Dyk. Judge Lourie, joined by Judge Dyk and three other judges, wrote a concurring opinion in CLS Bank affirming the district court's holding that all claims were patent ineligible under 35 U.S.C. § 101.

In CLS Bank, Judge Lourie evaluated Supreme Court decisions and proposed an "integrated approach" to § 101 questions based on three themes appearing in those precedents: 1) patents should not preempt fundamental tools of discovery by claiming a natural law, natural phenomenon, or abstract idea; 2) the substance of a claim is more important than its form in determining patent eligibility; and 3) courts should avoid rigid rules regarding subject-matter eligibility. Based on these themes, Judge Lourie proposed a four-step "integrated" approach:

Verify that the claim fits into one of the four statutory classes of invention (process, machine, manufacture, or composition of matter); Determine whether the claim raises § 101 abstraction concerns at all; If abstraction concerns arise, unambiguously identify the fundamental concept or abstract idea; and After identification of the abstract idea, evaluate the remainder of the claim to...