CLS Bank v. Alice Corporation Reveals “A House Divided”

The decision of the Supreme Court in Prometheus has been predicted to have implications for business method patentability, but the decision in what will surely become known as the Alice case provides an early indication that the CAFC may endeavour to limit its scope. Whether the claimed subject matter lies in the reality of patent-eligible subject-matter or is more correctly located in the Wonderland of abstract ideas is an issue that has been debated on both sides of the Pond, and on which the Dodo or the King of Hearts in his judicial capacity would surely have had an opinion if it had been brought to their attention. In the US there appears to be ample scope for further debate.

The patentees Alice Corporation are based in Australia and are a joint venture between a private company and National Australia Bank Limited. Their website [1] explains that they were established in Melbourne in 1995 and have applied for and obtained patents on their financial market innovations worldwide, including in the US, UK and other major financial centres. The patented innovations cover the trading of risk, investment, lending, exchanging and similar products. Alice exploits its inventions by licensing selected entities. Neither Alice nor Ian Shepherd who was the inventor has a significant web presence, and in contrast to the situation in Prometheus there appears to be no back-story that throws light on the merits or otherwise of the alleged invention.

In Europe, applications corresponding to the patents in issue were refused at first instance and appeals, though filed, were not pursued. The following passages from a communication accompanying a summons to oral proceedings in one of the European applications [2] encapsulate the views of the EPO examining division:

3.2 The claims of the present application are considered to relate to subject matter excluded from patentability under Art. 52(2) and (3) EPC and, although not completely devoid of technical character, are formulated to merely specify commonplace features relating to a technological implementation of such matter without inventive step (Article 56 EPC). The examiner could not, and still cannot, determine any technical solution defined in response to a problem within the content of the application as originally filed. Any problems which are addressed do not appear to require a technical, but rather an administrative, i.e. business solution. Whilst the implementation of such a solution may include the use of generic technical features these merely serve their well-known functions as would be recognised by the skilled person in the technical field under consideration.

3.3 The subject matter claimed in this application relates to a computer apparatus for the formulation and trading of multi-party investment contracts. The problem to be solved is how to obtain, for an ordering party and in the scope of phenomena with uncertain outcomes, an investment contract from potential counterparties which best meets the requirements of said ordering party. The solution proposed is to take into account the uncertainty of said outcomes by having both the ordering party and the potential counterparties define a set of probabilities of occurrence for each outcome. Said sets of probabilities are used to compare the potential counterparties’ offers to the ordering party’s requirements and to select the best counterparty. This is a mere administrative mechanism for providing a business solution to a non-technical problem. No technical problem has been convincingly laid out and none is apparent to the person skilled in the art from reading the current application. The only technical aspect that is present is the implementation of this business scheme on a computer system. However, said implementation does not go beyond the basic computer functions of inputting, outputting, exchanging or processing financial data according to a business algorithm. Such implementation stands on the use of a standard computer system with normal data input, output, process and storage capabilities and a standard network for transmitting data. These elements were part of the common knowledge in computer system design at the priority date of the application (07.07.1995). It is thus considered that the skilled person – a computer programmer – when given the requirements of the business scheme would implement said computer-based solution without having to exercise any inventive activity, the technical features and any considerations of the implementation following directly from said requirements (T0172/03  Order management/RICOH [3]). It is also noted that no further technical effect can be seen in the implementation of this business method.

In the US the patents in issue were 5,970,4796,912,5107,149,720 and 7,725,375. The following claim which is not limited to involvement of digital records and apparently also covers conventional paper records is representative of the asserted method claims and is as follows:

33. A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these [sic] transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and

(d) at the end-of-day, the supervisory institution instructing one of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

For the systems aspect the following claim is representative:

1. A data processing system to enable the exchange of an obligation between parties, the system comprising:

a data storage unit having stored therein information about a shadow credit record and shadow debit record for a party, independent from a credit record and debit record maintained by an exchange institution; and

a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust said shadow credit record and/or said shadow debit record in order to effect an exchange obligation arising from said transaction, allowing only those transactions that do not result in a value of said shadow debit record being less than a value of said shadow credit record; and (c) generate an instruction to said exchange institution at the end of a period of time to adjust said credit record and/or said debit record in accordance with the adjustment of said shadow credit record and/or said shadow debit record, wherein said instruction being an irrevocable, time invariant obligation placed on said exchange institution.

The present appeal focused on whether the opinion at first instance (District Court for the District of Columbia, Judge Rosemary M. Collyer) that each asserted claim of Alice’s four patents was invalid for failure to claim patent-eligible subject matter should be affirmed.

The majority view (Judges Linn and O’Malley) favoured reversal. The different roles played by the various sections of 35 USC lies at the heart of their opinion:

 It should be self-evident that each of these four statutory provisions—§§101, 102, 103, and 112—serves a different purpose and plays a distinctly different role. No one section is more important than any other. Together, they evince the intent of Congress in furthering the constitutional objective of promoting the progress of the useful arts. Because each of these sections serves a different purpose and plays a different role, invalidity, patentability, and patent eligibility challenges under these sections present distinctly different questions.

Although there is an abstract idea exception under §101, the dividing line between inventions that were directed to patent-ineligible abstract ideas and those that were not remained elusive. The mere implementation on a computer of an otherwise ineligible abstract idea would not render the asserted “invention” patent-eligible and it had never been suggested that simply reciting the use of a computer to execute an algorithm that could be performed entirely in the human mind was is sufficient to render a claim patent-eligible. But  where the machine played a significant part in permitting the claimed method to be performed, rather than functioning solely as an obvious mechanism for permitting a solution to be achieved more quickly, that machine limitation renders the method patent-eligible. It could therefore be appreciated that a claim that was drawn to a specific way of doing something with a computer was likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer might not. The core of the present uncertainty was the meaning of the abstract ideas exception which should be given a narrow interpretation:

As the Supreme Court has recently acknowledged, “too broad an interpretation of [the exceptions to § 101] could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Prometheus, 132 S. Ct. at 1293. Any claim can be stripped down, or simplified, removing all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed. But nothing in the Supreme Court’s precedent, nor in ours, allows a court to go hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patentee actually claims. It is fundamentally improper to paraphrase a claim in overly simplistic generalities in assessing whether the claim falls under the limited “abstract ideas” exception to patent eligibility under 35 U.S.C. § 101. Patent eligibility must be evaluated based on what the claims recite, not merely on the ideas upon which they are premised. In assessing patent eligibility, a court must consider the asserted claim as a whole…

In light of the foregoing, this court holds that when—after taking all of the claim recitations into consideration—it is not manifestly evident that a claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101. It would undermine the intent of Congress to extend a judicially-crafted exception to the unqualified statutory eligibility criteria of § 101 beyond that which is “implicitly” excluded as a “fundamental truth” that is “free to all men and reserved exclusively to none” …

Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea” under 35 U.S.C. § 101.

Judge Prost, in her dissenting opinion, objected that the unanimous directive of the Supreme Court to apply the §101 test with more vigor was being rejected. The CAFC was not writing on a blank slate because it had been reversed twice in the last three terms, see Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012) and Bilski v. Kappos, 130 S. Ct. 3218 (2010). In essence:

 The majority has failed to follow the Supreme Court’s instructions—not just in its holding, but more importantly in its approach. The majority does not inquire whether the asserted claims include an inventive concept. Even more fundamentally, the majority questions whether the Supreme Court’s abstract idea test is workable at all. Maj. Op. 13-14. Based on this apprehension, I take it, the majority devises a new approach to subject matter patentability. We must now avoid deciding a § 101 case unless unpatentability is “manifestly evident.” Maj. Op. 20.

I would be more empathetic if the majority’s approach was based on a case-specific determination, made upon the application of the Supreme Court’s abstract idea test to the asserted claims. As mentioned, however, the majority does not even attempt to inquire whether the claims disclose anything inventive. The bulk of the analysis focuses on the fact that the claims require “computer implementation,” which the majority itself deems insufficient to pass muster under §101. Maj. Op. 21-25. Nor is there any explanation for why the specific computer implementation in this case brings the claims within patentable subject matter.

The majority was sufficiently stung to footnote a rebuttal. It asserted that it had indeed enquired whether the claims disclosed anything inventive by examining the claim language and by criticising the district court for ignoring the inventions actually claimed. Applying all the relevant Supreme Court and other precedents, if the court was not wholly convinced that the subject matter of the claims was abstract, then the claims in question must be held patent-eligible.

On the facts, the majority holding was in favour of the patentability of the claimed subject matter, including the method claim which implicitly required a computer for its implementation:

Unlike the Bilski line of cases, however, it is difficult to conclude that the computer limitations here do not play a significant part in the performance of the invention or that the claims are not limited to a very specific application of the concept of using an intermediary to help consummate exchanges between parties. The dissent criticizes the majority for failing to explain “why the specific computer implementation in this case brings the claims within patentable subject matter,” but this criticism is misplaced. The limitations of the claims as a whole, not just the computer implementation standing alone, are what place meaningful boundaries on the meaning of the claims in this case…

The claim limitations can be characterized as being integral to the method, as “play[ing] a significant part in permitting the method to be performed,” and as not being token post-solution activity. It is clear, moreover, that the limitations requiring specific “shadow” records leave broad room for other methods of using intermediaries to help consummate exchanges, whether with the aid of a computer or otherwise, and, thus, do not appear to preempt much in the way of innovation.

While the use of a machine in these limitations is less substantial or limiting than the industrial uses examined in Diehr (curing rubber) or Alappat (a rasterizer), the presence of these limitations prevents us from finding it manifestly evident that the claims are patent ineligible under § 101. See Research Corp., 627 F.3d at 868. In such circumstances, we must leave the question of validity to the other provisions of Title 35.

Following a tabulated listing of the recited steps in their original language and in a “plain English Translation”, Judge Prost held that these findings were incorrect and witheringly observed:

The majority objects that “[i]t is impermissible for the court to rewrite claims as it sees them.”. But that is precisely what courts do in claim construction everyday. Perhaps what the majority actually means is that the plain§ English translation in Table 1 somehow glosses over a limitation that would otherwise narrow the claims to something that is non-abstract. One would wish that the majority had not kept that limitation a secret.

Her concluding test as applied to the system claims seems decidedly European in its approach:

That is, we must look beyond the non-inventive aspect of the claims and ask whether the remaining portion is an abstract idea.

However, the above test as boldly stated runs into the difficulty that this manner of looking at things was suggested by the Government in Prometheus but was decisively rejected by the Supreme Court.

If the parties decide to devote resources to further litigation, it is difficult to see how this decision can escape further review, whether en banc or via certiorari. There is room for sympathy with the view that §§101, 102 and 103 are distinct objections, but also with the view that they should not be interpreted with the rigidity formerly applicable to the forms of action at common law which in the UK were abolished in 1832 and which in the US were abolished progressively in the period 1850-1938. In Europe business method objections are mainly dealt with under the inventive step provisions of a.56 EPC, but strongly influenced by the exclusions of a. 52(2). In any event, it is apparent that the word abstract in the US can create just as much trouble and difficulty as the word technical does in the UK and before the EPC.

 


[1] http://www.alicecorp.com/fs_about_us.html

[2] https://register.epo.org/espacenet/application?documentId=EKSSP5XV3748FI4&number=EP96921823&lng=en&npl=false

[3] http://www.epo.org/law-practice/case-law-appeals/recent/t030172eu1.html#q=

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29 comments so far.

  • [Avatar for step back]
    step back
    July 18, 2012 07:14 am

    the topic “at” hand … (is what I meant to say)

  • [Avatar for step back]
    step back
    July 18, 2012 07:12 am

    I don’t quite understand their logic [that of Leahy and et al], if any.

    Stan,

    That is so because under the Citizens United decision, all citizens are equal but some citizens (i.e. the larger campaign funding corporate citizens) are more equal than others.

    But with that as an aside, we should not mix and confuse the provisions of the AIA with the topic hand which is the use of the confusing “patent eligibility” language now being used to refer to the provisions of 35 USC 101.

    You know, when a good painter paints a picture of how he sees the world, he doesn’t mix all the colors into one big, earth toned mess. He keeps the reds where the reds belong and the blues where they belong. Otherwise one could not make sense of that which is being painted.

    Similarly when the courts are painting a picture of the subject matter classifications under 35 USC 101, they should not be mixing in the obviousness aspects of 103 and the claim construction aspects of 112 to create one big “patent eligibility” mess. The creation of a “shadow file” is a physical step. Period. Whether the claimed physical method is an obvious one or not is something that should be determined under the provisions of section 103 as Congress clearly intended, not under 101. There is absolutely no mention of obviousness inside 101.

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    July 17, 2012 07:43 pm

    Step Back-

    What you allude to is why I was so opposed to the AIA, which abandoned the FTI scenario in favor of a FITF system. Now we here in the US have decades of settled patent law, that has basically been turned on it’s head by the Congressional fiat, so is it any wonder the courts seem to be a bit confused, if they weren’t already before then?

    The effects should be vanishingly small in my particular present case, but the bigger picture further down the road is what I am so concerned about. If they get away with this present song and dance, where will it ever stop? Leahy and et al have made it harder to get a patent granted, and much easier to challenge them, and that is supposed to be a Good thing? I don’t quite understand their logic, if any.

    Cheers,
    Stan~

  • [Avatar for Anon]
    Anon
    July 17, 2012 06:42 pm

    Paul,

    The fact of the matter is that you still have not acknowledged the differences in law that are pertinent to the discussion.

    The fact of the matter is that you did show bias (as I pointed out) and that you tried to deny and hide this bias, which only aggravated the situation.

    “Agreeing to disagree” is an inappropriate nicety to describe our diagreement. Our disagreement has nothing to do with the relative “comes first” between facts and law. Please note that I did not even focus on the fact that you got the facts wrong, that you misunderstood the stipulated facts! In fact, thinking about it this way, I think I am more troubled by your latest attempt to weasel out of my comments and avoid squarely addressing them. If you were to first squarely address them and then we disagreed, then we could agree to disagree. Instead, you emply non sequiturs and changing of legal issues in addition to ignoring the points raised.

    While not “dishonest” per se, it is not “honest” per se either. It’s an unworthy game for this forum.

  • [Avatar for step back]
    step back
    July 17, 2012 05:40 pm

    Paul,

    The manner in which the US Congress structured our patent laws is a “fact”.

    35 USC 102 handles the question of whether the claimed subject matter is “novel”.

    35 USC 103 separately handles the question of whether the claimed subject matter is “obvious”.

    35 USC 101 separately handles the question of whether the claimed subject matter is one of the enumerated four classes of statutory subject matter and whether the Whoever did the inventing is he or she who is applying for a patent therefor.

  • [Avatar for Paul Cole]
    Paul Cole
    July 17, 2012 04:53 pm

    @ Anon

    The key difference between is, I think, is that you think the law comes first, while I think the facts come first and the law is then applied (or misapplied) to the facts. So we must agree to differ.

  • [Avatar for Anon]
    Anon
    July 17, 2012 12:40 pm

    No reason why this should not be patent-eligible if the method achieves a new result not obtained before.

    Except, the US Supreme Court rejected this line of thinking in Prometheus.

    This also raise my shackles when those who should know better insist on treating patent eligbility and patentability as interchangeable.

    They are not.

    Paul, as to your comment at 15, “And I am not biased, merely seeking information which you have not yet attempted to provide. Why, in a few words, was this a good invention?” your continued insistence on ignoring the bias which was plainly pointed out will not do. You are no more “merely seeking information” than the use of the word “withering” was merely pointing out a difference of opinion.

    It is insulting that you think that your choice of words is so malleable that you can ignore what you were really doing when you are called on the carpet for doing so. Your continued efforts to switch the discussion from the point of law (101) to something you would be more comfortable discussing (103) for any reason (for example, risk of reversal on an issue of law not under discussion) simply smacks of not addressing the points raised directly to your post.

    I would much rather you honestly say “Those are good points and I do not have an answer.” and then add “A further point is ‘…’ ” and then elaborate on any additional points of law you wish to inject (like 103). In that manner, you will not appear to be engaged in a “switch and bait” or “running” from the points raised in opposition to your post.

  • [Avatar for step back]
    step back
    July 17, 2012 05:41 am

    Paul,

    If you give credence to what the “press” says about almost anything, then I highly recommend the following two authoritative publications:

    1) National UFO and BigFoot Enquirer here in the rebellious Dysfunctional States; and
    2) Patents OK! (Not) over there on your shore side of the Big Pond

    /end sarcasm

    But with sarcasm aside, the first of my links at comment number 7 does happen to imply that the “creation” of the “shadow files” is a physical step and not a random, “abstract” illusion. Also the maintenance of such files over the course of a trading day (something the link doesn’t mention) is also a physical step (because “time” is one of the minimum 4 dimensions recognized even by Newtonian physics) and not a random, “abstract” illusion.

    Speaking of abstract illusions, did you happen to catch the story about the inventors of Dragon Naturally Speaking getting taken to the Wall Street Cleaners when they sold all their real IP rights in real software in exchange for illusory paper (a.k.a. stock)?:
    http://www.nytimes.com/2012/07/15/business/goldman-sachs-and-a-sale-gone-horribly-awry.html?_r=1

  • [Avatar for Paul Cole]
    Paul Cole
    July 17, 2012 02:41 am

    @ Step Back

    Now that I have had a little time to restudy the previous posts, I commend the two refernces identified in comment 7.

    It seems from the press comments that this is a method of reducing risk in financial transactions. No reason why this should not be patent-eligible if the method achieves a new result not obtained before. However, the press comments express doubt that it does.

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    July 16, 2012 07:49 pm

    That would be correct in my opinion Paul. It spells out very clearly which claims or patent applications should be rejected, using 101, 102, 103 or 112 tests, mostly in no uncertain terms, it seems to me. Congress or the Courts can always decide differently of course, but they need to explain why convincingly, much like Clear and Convincing evidence or arguments (75% test?) to support their assertions. It shouldn’t Ever be a *maybe* sort of opinion, like a preponderance of the evidence as in more likely than not. The latter only requires a 51% type of decision, which is not what the US Constitution seems to be suggesting at all as far as I am concerned.

    Beyond a shadow of a doubt would be more like a 95% decision, usually only invoked during a very severe accusation of guilt where the accused is in serious jeopardy.

    We hold these truths to be self evident here in the US, or at least most of us do, I would like to think. Your laws may differ, but here you are innocent until proven guilty. Aren’t Australian and Kiwi laws also like that? No Bridge of Sighs allowed at all.
    http://www.youtube.com/watch?v=aIiIQ4uNs3o

  • [Avatar for Paul Cole]
    Paul Cole
    July 16, 2012 06:38 pm

    As I recall, changes in USPTO examining practice are published in the Federal Register. So although it does not have the force of law, it is not mere academic writing either.

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    July 16, 2012 05:57 pm

    Tom-

    No it is not law, but it represents best practices that the USPTO has developed over decades, or arguably hundreds of years. Only Congress can change the Law, or the judges and Justices can confuse everybody with decisions that warp the interpretation of what Congress has decided should be the Law of the land. Warpage is not a very good idea as far as I am concerned, but to each their own I suppose. Attorneys can deal with morphing responsibilities, if they have to, but the question seems to be Why should they have to do so?

    To make some judge proud that they have left their mark on US patent law? Well I have a bulletin for you, they Did make a mark, and it might take decades to try to heal it.

  • [Avatar for Tom Gallagher]
    Tom Gallagher
    July 16, 2012 05:33 pm

    The MPEP is not a law or a regulation. In the US, Patent Law is Title 35 of the US Code. The PTO regulations are Title 37 of the Code of Federal Regulations. The MPEP is nothing. I know that patent examiners think it is more important than 35 USC or 37 CFR, but it has no legal value. It was written by a …never mind. The MPEP is useful because it incorporates the USC and CFR, but most of the MPEP is nugatory. Did I get that right?

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    July 16, 2012 05:25 pm

    Paul-
    I fear that you are correct in your last statement, as the problem is probably very similar on your side of the Pond. As far as I am aware, it is not possible to *fire* a judge or Justice here in the US, even if they get biased very badly in what many or most might consider to be Bad directions.

    Probably the best solution is to just get the patent or applications done properly in the first place, which would render this whole discussion somewhat moot, and result in the challenging party having no defensible ground to stand on. It would also not give the Courts any decisions to make, such that they will not be able to muck up well established and tested US patent law practices. I can’t help but wonder if any of my US judges or Justices know what the MPEP has to say, or even know that it exists, or even care if they do.

  • [Avatar for Paul Cole]
    Paul Cole
    July 16, 2012 04:48 pm

    @Anon

    The reference to vanity was derived from Ecclesiastes Ch 1. v. 2:” Vanity of vanities, saith the Preacher, vanity of vanities; all is vanity.” It was not an allegation of playing to vanity (i.e. pride) but of taking a position that was futile. People of my generation at least would have been expected to know their Bible and to have picked the reference up.

    And I am not biased, merely seeking information which you have not yet attempted to provide. Why, in a few words, was this a good invention? If there is no easy answer to that question then the present decision is at risk of reversal. Especially in a non-expert court such as the Supreme Court which has in recent years seen a parade of weak patents coming before it and from the decisions handed down has evidently been less than impressed. It is not attractive for a judge to support an apparently worthless patent on a technicality, and if that is how they perceive the inventions in these patents, the Supremes will be inclined to point out the similarities between this case and Bilski and hold the claimed inventions to be unpatentable. If there are cracks in the structure of fact before the Court, then the law will not be adequate to paper those cracks over and the decision will be reversed. I express no concluded view as to the outcome, merely identify a factor which in my opinion will have a powerful influence on the outcome. And identifying that question does not require legal knowledge, merely an understanding of how judges’ minds usually work. That changes less than you might think in travelling from London to Washington.

  • [Avatar for Anon]
    Anon
    July 16, 2012 01:35 pm

    Thanks Stan.

    I am still at a loss as to why you might be disagreeing with me.

    I thanked Paul for providing his viewpoint; but rather took issue with how his viewpoint came across in an unfortunately biased way that has nothing to do with the merits of the case. In fact, I thought I was being helpful by pointing out to Paul that the inclusion of such bias weakens his argument where he may be thinking that he is advancing his views well. I do not care if he “leaves in” his bias, as long as that bias is suitably noted and not passed off as “mere noting of the strength of difference,” which is an insult to anyone with half a brain.

    Respectfully, I too give credit to the dissent. Obtaining a healthy discussion of both the dissent and the majority was the thrust of my post. Please note that I politely invited more discussion on topics that were not misrepresented or tinged with unfortunate bias.

    However, I do not think that slanted language and an absence of credit (where credit is due) to the majority opinion is an exercise in intellectual honesty that I know that Gene promotes on this blog. If I wanted slanted views and misrepresentations I know where to go. What especially irked me is that over the course of the last few days I have noted that Mr. Cole was suitably informed of his misrepresentations and chose to ignore that which he disagrees with. Having an experienced EPO outlook is all fine and good, but confusing that outlook with US law and disregarding differences when they are pointed out is not all fine and good. The price of Tea in China will be what it will be. But so will US law, no matter how much Mr. Cole would like that law to be the same as EP law, it is not. If one of your ingredients in your Kool-aid batch calls for Chinese Tea (or US Law) and you substitute Burmese Python Droppings (or EP Law), do you really have the same concoction?

    I have no problem with respectfully agreeing to disagree. I do have problems with misrepresentations and mischaracterizations – of the law, of the issues, of the facts and of my postings. I do not care for what can only be called “smarminess” in Paul’s post number 24 on the thread https://ipwatchdog.com/2012/07/12/cls-bank-international-a-fractured-landscape-of-patent-eligibility-for-business-methods-and-systems .

    It is not I that waffles.

    It is not I that plays to vanity.

    It is not I that confuses facts not in issue with what the actual issues being decided are.

    Rather than turning to the actual issues, we have a PO-worthy effort of digging in and throwing out distracting and false statements.

    Not Paul’s finest hour. I expect better. And so should you.

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    July 16, 2012 12:54 pm

    I very rarely disagree with what you write here, and my statement was merely hypothetical. I do, however, question your seeming assertion that Paul’s opinions and adjectives should be left out of this article that he wrote. For me, it provides an interesting international perspective, that is hard to find elsewhere for folks like myself.

    I was just reserving the right to respectfully agree to disagree, for reasons that should be properly explained in my dissenting opinion. I feel that the courts are falling short of the mark in this latter respect, which is not at all fair to the *whoever* that Step mentions. We have to rely on intelligent and experienced attorneys like yourself to try to correct things, if at all possible.

    Cheers,
    Stan~

  • [Avatar for step back]
    step back
    July 16, 2012 11:40 am

    Stan,

    Thank you for chiming in.

    Every so often we patent practitioner types (lawyers, barristers, etc.) forget about that little “Whoever” whom appears at the start of law section 35 USC 101.

    Do you know who “Whoever” is?

    Yes, it’s you, the INVENTOR!

    But one rarely sees this “Whoever” being mentioned by the high and mighty Supremes or the bench warming Fed Circuiters (or by those who in hindsight deride the work and contributions of the “inventor”).

    So above in Paul’s post, we see the EPO examining division pontificating as follows:

    3.2 The claims of the present application are considered to relate to subject matter excluded from patentability …

    3.3 The subject matter claimed in this application relates to a computer apparatus for the formulation and trading of multi-party investment contracts. The problem to be solved is …

    The solution proposed [by an unmentionable “Whoever”] is to take into account the uncertainty of said outcomes by having both the ordering party and the potential counterparties define a set of probabilities …

    This is a mere administrative mechanism for providing a business solution to a non-technical problem. No technical problem has been convincingly laid out and none is apparent to the person skilled in the art from reading [n hindsight] the current application. The only technical aspect that is present is the implementation of this business scheme on a computer system. However, said implementation does not go beyond the basic computer functions [–as distinct from the “unbasic” functions–] of inputting, outputting, exchanging or processing financial data according to a business algorithm [that has been proven to be fully in the prior art]. Such implementation stands on the use of a standard computer system [–apparently the EPO version of the USA mythical ‘general purpose, does it all computer’] with normal data input, output, process and storage capabilities and a standard network for transmitting data. These elements were part of the common knowledge in computer system design at the priority date of the application (07.07.1995). It is thus considered that the skilled person – a computer programmer – when given the requirements of the business scheme would implement said computer-based solution without having to exercise any inventive activity, the technical features and any considerations of the implementation following directly from said requirements

    Humph

  • [Avatar for EG]
    EG
    July 16, 2012 09:01 am

    “The majority objects that “[i]t is impermissible for the court to rewrite claims as it sees them.” Maj. Op. 23 n.4. But that is precisely what courts do in claim construction everyday.

    Paul,

    Thanks for noting the above quote from Prost’s dissent. If Prost truly believes that “rewriting claims” is the same as “construing claims,” her views are warped (and she is not alone in this “warped” view). The majority is correct that her “plain English translations” are impermissible “rewriting” of the claims without construing them “as is.” Put differently, claim construction means construing the claim “as is,” not paraphrasing it as Prost has done.

  • [Avatar for Anon]
    Anon
    July 16, 2012 08:10 am

    Anon can disagree with us both, but that doesn’t change the price of Tea in China, after all

    I am sorry that I do not see precisely where we disagree Stan. Did one of your posts not get posted?

  • [Avatar for Stan E. Delo]
    Stan E. Delo
    July 16, 2012 02:10 am

    Step Back-

    It must be somewhat puzzling to some in the judiciary branch why others happen to disagree with them. What price do They have to pay for their high-priced Ivory Tower accommodations? Not a dime, and they can’t be evicted, either. How do you “politely” tell a Supreme Court Justice that they seem to have gotten their socks on the wrong feet when they got up on any particular morning?

    Nicely done Paul, although the quotes got a bit too involved for my particular tastes, because I have not been formally trained in patent or any other kind of law, but I Have watched Every episode of Perry Mason, Attorney at Law ever aired. Anon can disagree with us both, but that doesn’t change the price of Tea in China, after all. Your European perspective I find to be very interesting, as it points out differences that might need to be considered carefully as US patent law *evolves*, or perhaps *devolves* more likely in my opinion. I would have preferred to hear more about what you made of it, instead of trying to figure out What the judges and Justices were trying to say in their *decisions*, either dissenting or in the majority.

    I think they need to be called on it, and implored to consider the issues en banc, instead of just shooting from the hip like cowboys out in the Wild West way back when.

    A free round of Quixotic Quinine Kewl Aide to all attending!

    Patentless in Seattle,

    SD~

  • [Avatar for MaxDrei]
    MaxDrei
    July 15, 2012 04:51 pm

    Paul, nice post. I’m interested in your linking “abstract” and “technical”. Ryan Alley blogs about the “degree” of specificity of implementation needed in your specification, to deter a finding that the subject matter you are claiming is “abstract”. I can see there might be such a thing as a “degree” of abstractness (and that the degree to defeat patent-eligibility might vary with the panel you get at the CAFC). When you are at home at the EPO, do you detect that “technical” is another concept that has a “degree” that varies, depending which panel you get for your appeal at the EPO?

  • [Avatar for step back]
    step back
    July 15, 2012 04:16 pm

    Here are two more links readers of this post might be interested in:

    Alice’s patents do involve the creation of computerized credit and debit records for each party to ensure that there are sufficient funds in each side’s account to complete the transaction. Such so-called “shadow” records are a specific application, the majority found.

    Dissenting Judge Sharon Prost criticized the majority for flouting the Supreme Court’s directive in recent cases to be more discriminating in deciding what can be patented.

    source: http://newsandinsight.thomsonreuters.com/Legal/News/2012/07_-_July/Federal_Circuit_finds_business_method_patentable/

    Like many patent disputes, the battle over the Alice Corp. patents may boil down to a battle over whether they describe any truly new invention or not. And minimizing risks through “financial intermediation,” as Prost notes in her dissent, is a “literally ancient” idea, dating back to the early Roman Empire.

    source: http://arstechnica.com/tech-policy/2012/07/judge-blasts-colleagues-for-defying-scotus-allowing-financial-patent/

  • [Avatar for step back]
    step back
    July 15, 2012 04:07 pm

    Paul,

    I didn’t realize you were Europe based.

    Maybe that’s a good thing because it allows you to look across the The Pond from afar and wonder what those Mad Hatters on the other side are up (-side downly up) to these days.

    Yes the new daze incantations from our US Supreme Court and from our Federal Circuit can be taken right out of Alice Through the Looking Glass.

    US judges have no more respect for the written law than do any politicians or quack-misters who decide the law is simply whatever they choose at the moment for the law to be and to mean.

    35 USC 101 starts with the word, “Whoever”.
    The written law is directed to identifying the person or persons who are entitled to apply for a patent.

    35 USC 112 states: “The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.”

    This latter section has been taken over the years to mean that it is the inventor (through counsel) who decides what “the invention” is is, and not some government bureaucrat and not some high on his/her bench judge.

    Alas, our Supreme Court general law justices have apparently not been tutored on this fine point of US patent law (as written) and it seems that the new age bench warmers on the Federal Circuit have not either.

    Sigh.

  • [Avatar for Tom Gallagher]
    Tom Gallagher
    July 15, 2012 03:17 pm

    Isn’t this case moot in view of the America Invents Act?

  • [Avatar for Anon]
    Anon
    July 15, 2012 02:16 pm

    @Paul,

    I beg to differ on your use of words. To a lawyer, especially a patent lawyer, choice of words is hardly ever a mistake.

    It is clear which way you lean, and to say that the choice of words merely reflects the force of differerence is to ignore the very bias I point to.

    Not only are you ignoring comments addressed to substantive matters of law, you choose to ignore how you present those matters which in my mind casts double suspicion on the veracity of your position. To me, this weakens rather than strengthens the viewpoint that you lean to.

    On other points in your response, I would be interested in what you think the Supreme Court “test” is. I and others (broadly) commented on the last Supreme Court case dealing with “abstract,” that is Bilski as plainly being lacking in how it got to its pronouncement.

    So notwithstanding my disagreement, I thank you for sharing your point of view.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 15, 2012 02:04 pm

    Everyone-

    Paul pointed out that when I took his article and published it I did not properly identify Judge Prost’s full quote. The quote was 2 paragraphs, not one. This made it look like the second paragraph from Judge Prost’s quote was actually a part of Paul’s article/commentary. I have fixed this and apologize for the editorial error.

    -Gene

  • [Avatar for Paul Cole]
    Paul Cole
    July 15, 2012 12:46 pm

    @Anon

    I think it is enough to identify the controversy and in this posting not to add too much comment. The disagreement between the majority and the minority is clear enough in the decision and the quoted passages and needs little elaboration. And words such as “stung” and “withering” merely highlight the force with which the differences have been expressed.

    Unfortunately the Supreme Court does have an abstract idea test, but the problem with that test is that it was too widely expressed and the limits of its applicability are too indistinct, as has been pointed out by many commentators.

    The majority has put forward good arguments but in suppoer of a weak case, and the dissent provides an intellegent and well-reasoned objection as you rightly point out. The outcome may well be review either en banc or at the Supreme Court and in either case what is finally handed down may be even less helpful to our profession than the divided Bilski decision and the unanimopus but arguably flawed Prometheus decision.

  • [Avatar for Anon]
    Anon
    July 15, 2012 10:32 am

    The CAFC was not writing on a blank slate because it had been reversed twice in the last three terms, see Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012) and Bilski v. Kappos, 130 S. Ct. 3218 (2010).

    You negelct to mention that while being reversed, the CAFC was invited to sharpen its view of 101 jurisprudence. You also seem to ignore the error made by Judge Prost (and others) who think that “sharpening” must only be in the direction of tightening eligible subject matter. The Majority address this aspect quite specifically.

    made upon the application of the Supreme Court’s abstract idea test to the asserted claims.” This is also a problem Paul, as themajority correctly noted that there is no such Supreme Court abstract idea test. The Supreme Court did not supply a test, so your lament of “I would be more empathetic if the majority’s approach was based on a case-specific determination” may be accurate, it is also quite besides the point because there is no case-specific determination for the CAFC to follow. The instant case IS that case-specific determination. As such, your empathy is misplaced, or rather, placing that empathy is not germane.

    The majority was sufficiently stung to footnote a rebuttal” I think you inject an unnecessary bias with your choice of words. “Stung” is inappropriate. What the majority did was answer an intelligent objection. And a capable and equally intelligent response it was.

    Further, your bias is injected again with the comment “and witheringly observed.” You omit the majority’s equally “withering” response to this dissent comment.

    While not fully comitted to all of the nuances of the poster’s view, I recommend that you read and study A New Light’s discussions on the subject over at Patently-O. I would also point out the comment that applies that in US Law, “Useful Arts is broader than the EP notion of technical arts.” This too was pointed out to you at Patently-O by the poster “vive la différence”.

    I enjoy your experience and viewpoint from an EP perspective, but feel that your article would benefit if you did not ignore the limitations of your view as translated into US Law when they are amply made available to you.

    I hope Gene’s forum allows a more respected exchange on these important (US Law) legal points.