Recent court decisions make it more challenging to protect computer-related inventions with patents. On September 5, in the case of Accenture v. Guidewire,^[1] the Federal Circuit issued a split decision holding that a computer-related invention was not eligible to be patented.

At issue in Accenture was the validity of an already issued patent having claims directed to a system, and to a method, for generating tasks to be performed in an insurance organization. The system claims required an “insurance transaction database,” a “task library database,” a “client component,” and a “server component.” These items, which have sub-items that also appear in the claim, cooperate with each other to generate the tasks to be performed.

The patent also included a method claim that recited steps in a computer environment involving an event processor that interacts with an insurance transaction database, a task assistant, and a storing step.

In the past, this kind of structural detail in a computer-implemented system claim and a computer-implemented method claim would be sufficient to support a determination that the subject matter would be eligible for a patent, and, indeed, a patent with such claims was issued by the Patent and Trademark Office. Illustrating the structural detail in the system claim, the last subparagraph of the claim reads this way:

. . . wherein the event processor is triggered by application events associated with a change in the information, and sends an event trigger to the task engine; wherein in response to the event trigger, the task engine identifies rules in the task library database associated with the event and applies the information to the identified rules to determine the tasks to be completed, and populates on a task assistant the determined tasks to be completed, wherein the task assistant transmits the determined tasks to the client component.

Accenture put considerable additional detail into its patent, which has 15 figures, and occupies 110 columns of print. The patent is loaded with examples, including numerous excerpts of actual programming code, showing how Object Oriented Programming structures implement the invention.

Yet the Federal Circuit held that the subject matter defined by the system claims is not patent-eligible, relying on the court’s own non-precedential opinion in CLS Bank Int’l v. Alice Corp., decided in May 2013 .^[2] The plurality opinion inAlice Corp. in turn relied principally on the Supreme Court’s 2012 decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc.^[3]

Determining that subject matter defined by a patent claim is eligible for a patent does not mean that the owner of such a patent claim deserves a patent, because the patent law also requires that the subject matter must be new and must not have been obvious to a person of ordinary skill in the field of the invention. These last two requirements correspond to sections 102 and 103 of the patent law.^[4]

The patent eligibility requirement comes from a different part of the patent law, section 101: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”^[5]

Section 101 seems simple enough. Historically, courts have said that this provision should be interpreted broadly. For example, in the case of Diamond v. Chakrabarty, the Supreme Court held that a new bacterium, engineered to degrade hydrocarbons, was eligible to be patented.

Recently, however, the Supreme Court, while giving lip service to these principles, is ratcheting back on patent eligibility. The court’s unanimous decision in Prometheus, about which we have written previously, started the new trend. In that case, the claims were directed to administering a thiopurine drug to a subject with a gastrointestinal disorder, determining the level of a specific metabolite in the subject, wherein a level below a first threshold indicates a need to increase drug dosage and wherein a level above a second threshold indicates a need to decrease drug dosage.^[6]

In evaluating patent eligibility, the Prometheus court simplified the patent claims, choosing to generalize the claim limitations and to ignore their specific provisions. Where the claims require administering a thiopurine drug to a subject with a gastrointestinal disorder, a step requiring a human intervention in which a drug is administered to the patient, the court says that “the ‘administering’ step simply refers to the relevant audience, namely doctors who treat patients with certain diseases with thiopurine drugs.”

Where the claims similarly require determining the level of a specific metabolite in the subject, thus specifying a second human intervention typically requiring getting a blood sample from the subject and analyzing the blood sample, the court characterizes this determining step as one that “tells doctors to engage in well-understood, routine, conventional activity previously engaged in by scientists who work in the field”. Finally, where the “wherein” clauses involve making inferences that are rooted in the context of these human interventions, the court waves them off as language to “simply tell a doctor about the relevant natural laws.”

Although the Prometheus court might have chosen to invalidate the patent on the grounds that the claims cover subject matter that would have been obvious to a person of ordinary skill in the art (using the provisions of section 103 of the patent law), the court instead went out of its way to say that the claimed subject matter was not eligible to be patented (using the provisions of section 101 of the patent law). The court’s theory was that “the patent claims at issue here effectively claim the underlying laws of nature themselves.” ^[7]

The court relied on such of its precedents as Gottschalk v. Benson (1972), which held that “the claim (like the claims before us) was overly broad; it did not differ significantly from a claim that just said ‘apply the algorithm.’” ^[8]Bensonheld that a computerized method for converting signals from binary coded decimal form into binary form was not patent eligible. Justice Douglas wrote for the court that “[t]he mathematical formula involved here has no substantial practical application except in connection with a digital computer, which means that if the judgment below is affirmed, the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.”^[9]

Most patent practitioners had regarded the Benson decision as effectively overruled by later decisions of the Supreme Court, but the Prometheus decision, in giving new life to Benson, now threatens not just patents for diagnostics like those involved in Prometheus, but also patents for other kinds of inventions, including computer-related inventions.

Because the Prometheus court’s analysis, such as it is, of the patent claims slights the actual wording of the claims, the decision fails to provide any reasonable guidance to users of the patent system as to what subject matter is eligible to be patented. Indeed, in ruling that the claimed activities, involving a minimum of two human interventions relating to a patient with a gastrointestinal disorder, are too abstractly specified, the court provokes great uncertainty as to the patent eligibility of many kinds – and perhaps all kinds – of patent claims.

A similar pattern of analysis drives the Federal Circuit’s decision in Accenture v. Guidewire. The majority opinion was authored by Judge Lourie, who also wrote the plurality opinion in CLS Bank v. Alice Corp. that was followed in Accenture. According to Judge Lourie in Accenture, the Prometheus decision specifies a procedure to determine whether a claim is too abstract to be eligible for a patent:

In the case of abstractness, the court must determine whether the claim poses any risk of preempting an abstract idea. To do so the court must first identify and define whatever fundamental concept appears wrapped up in the claim. Then, proceeding with the preemption analysis, the balance of the claim is evaluated to determine whether additional substantive limitations narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.^[10]

Judge Lourie first states that the trial court correctly found the method claim ineligible for a patent. He then evaluates the system claim in light of the method claim:

Because the ’284 patent’s method claims have been found to be patent ineligible, we first compare the substantive limitations of the method claim and the system claim to see if the system claim offers a ‘meaningful limitation’ to the abstract method claim, which has already been adjudicated to be patent-ineligible.^[11]

Judge Lourie finds that the system claim does not offer such a “meaningful limitation,” and therefore is patent-ineligible. Moreover, he says that even considered on their own, the system claims “fail to include limitations that set them apart from the abstract idea of handling insurance-related information.”^[12]

Judge Rader, in a vigorous dissent, said that “any claim can be stripped down, simplified, generalized, or paraphrased to remove all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed. A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims.”^[13]

It will be apparent that Judge Rader’s criticism of Judge Lourie’s opinion applies equally to the Prometheus decision itself, which spawned the patent eligibility analysis of Judge Lourie in CLS Bank v. Alice Corp. as well as in Accenture. The case of Alice Corp., the first time that Judge Lourie advanced his interpretation of Prometheus, produced an unusually splintered court: separate opinions by Judge Lourie (for himself and Judges Dyk, Prost, Reyna, and Wallach), Judge Rader (for himself and Judge Moore, and in some aspects, for Judges Linn and O’Malley), Judge Moore (for herself and Judge Rader, and, in some aspects, for Judges Linn and O’Malley), Judges Linn and O’Malley, Judge Newman, and Judge Rader (again).

The final vote tally in Alice Corp. shows Judge Lourie aligned with Judges Dyk, Prost, Reyna, and Wallach, to deny patent eligibility for all of the patent claims including the system claims, and Judge Rader with Judges Linn, Moore, O’Malley, and Newman to find the system claims patent-eligible. Judges Linn, O’Malley, and Newman would find both the system claims and the method claims patent-eligible.

With the present makeup of the Federal Circuit, one can predict fairly well how a computer-related patent will be treated according to which judges are on the panel hearing the appeal. In Accenture, the panel included Judges Lourie, Rader, and Reyna. Because Judge Reyna sided with Judge Lourie in Alice Corp., he also sided with him in Accenture. Therefore the vote in Accenture was 2-1 in favor of finding that the system claims were not eligible for a patent.

Surprisingly, in another recent case, decided in June 2013, Ultramercial v. Hulu,^[14] Judge Lourie voted with Judges Rader and O’Malley to uphold patent eligibility of a computer-related method. The method claim required these steps, as summarized by Judge Rader:

(1) receiving media products from a copyright holder, (2) selecting an advertisement to be associated with each media product, (3) providing said media products for sale on an Internet website, (4) restricting general public access to the media products, (5) offering free access to said media products on the condition that the consumer view the advertising, (6) receiving a request from a consumer to view the advertising, (7) facilitating the display of advertising and any required interaction with the advertising, (8) allowing the consumer access to the associated media product after such display and interaction, if any, (9) recording this transaction in an activity log, and (10) receiving payment from the advertiser.^[15]

In this instance, the method limitations were sufficiently specific and sufficiently tied to the operation of a computer that Judge Lourie did not find the claim patent-ineligible.

The uncertainty of the law relating to patent eligibility, introduced by Prometheus, and now manifested in Alice Corp. and Accenture, is a serious problem. We can expect that one or more of these cases will reach the Supreme Court.^[16]However, it is the Supreme Court’s decision in Prometheus that has caused the problem, and it cannot be counted on to fix it.

In the meantime, if the judges who sided with Judge Lourie in Alice Corp. dominate a panel for an appeal, any patent claims to a computer-related invention will survive only if they are extremely specific, as they were in Ultramercial v. Hulu. On the other hand, even an extremely specific claim might still be shredded and denied patent-eligibility by Judge Lourie’s abstraction engine, depending on how the analysis is conducted, because the analytical method he advances—as Judge Rader rightly points out in the same case—can be used to deny eligibility to any patent claim.

This author believes that a legislative solution could usefully bring the law of patent eligibility back to where it stood before the Prometheus decision. He therefore suggests a one-sentence legislative amendment:

Section 101 of Title 35 of the United States Code shall be amended by adding the following sentence at the end thereof:

An invention that produces a useful, concrete, and tangible result shall not be denied eligibility for a patent on the ground that it is directed to a law of nature, natural phenomenon, or abstract idea.

The rationale for this legislative proposal is to provide a surgical solution to nullify the effect and rationale of Prometheus while otherwise leaving the law of section 101 intact.^[17] The phrase “a useful, concrete and tangible result” appeared in a 1981 Supreme Court decision, Diamond v. Diehr, ^[18] that until Prometheus many thought had the effect of overruling the court’s decision in Gottschalk v. Benson.

The point is not that all computer-related inventions (of the type in Alice Corp.) or all diagnostics inventions (of the type in Prometheus) should be granted patents. Rather, the point is that they should not be summarily denied eligibility to be considered for a patent. All inventions must clear the hurdles of being new and non-obvious. What is happening in the world since Prometheus is that many inventions now risk being denied the chance to get in line to be examined for these things. That state of affairs speaks poorly for the patent system.

^[1]Accenture v. Guidewire, No. 2011-1486 (Fed. Cir. 9/5/13)(slip opinion).

^[2]Accenture v. Guidewire, slip opinion, page 8 et seq., citing CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013) (en banc). Accenture had not appealed invalidation of the method claims.

^[3]Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2013), cited in CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 at 1279.

^[4] 35 U.S.C. §§ 102 and 103.

^[5] 35 U.S.C. § 101.

^[6] 132 S. Ct. at 1295.

^[7]132 S. Ct. at 1305.

^[8] 132 S. Ct. at 1301. In fact, the claim in Gottschalk v. Benson was specifically limited to the hardware environment of a shift register and was quite precise as to how the shift register is used in carrying out the claimed process.

^[9] 409 U.S. at 71-72.

^[10]Accenture, slip opinion, page 8. Interior quotation marks, ellipses, and case citations have been omitted for clarity.

^[11] Slip opinion, page 10.

^[12] Slip opinion, page 14.

^[13] Dissenting slip opinion, page 1. Interior quotation marks and brackets have been omitted.

^[14]Ultramercial v. Hulu, 722 F.3d 1335 (Fed. Cir. 6/21/13).

^[15] 722 F.3d at 1350.

^[16] A petition for certiorari has been filed in WildTangent Inc. v. Ultramercial, LLC, another case raising similar issues.

^[17] Such an amendment to section 101 to override the Supreme Court ruling in Prometheus would parallel the change by the 1952 Patent Act in section 103 to override the Supreme Court ruling in Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84, 90, 91 (1941)(“flash of creative genius”) with respect to what constitutes an “invention”. This latter story is recounted in Judge Rader’s opinion in CLS Bank v. Alice Corp., 717 F.3d at 1295 et seq. See also Graham v. John Deere Co., 383 U.S. 1, 15 (1966).

^[18]Diamond v. Diehr, 450 U.S. 175 (1981).