The case pits CLS Bank International, the largest multi-currency cash settlement system for the foreign exchange market, versus Alice Corp., the patent holder of a "computerized trading platform for exchange obligations."
A panel of Federal Circuit judges validated the patents in a 2-1 ruling in July. In October, the Federal Circuit granted an en banc review.
In arguing for CLS, Gibson, Dunn & Crutcher partner Mark Perry told the en banc panel of 10 judges that "these patents claim only abstract ideas," and that "reciting an abstract idea is not a sufficient claim."
Judge Pauline Newman questioned Perry on the definition of abstract. He responded by saying that it's something that can be done "entirely in the human mind or made with pen and paper." Using a computer to accelerate this process does not make the method unique, it simply accelerates the process. "In this context, a computer is a neutral," Perry said.
Nathan Kelley, the deputy solicitor for the U.S. Patent and Trademark Office, supported Perry's claims.
"We reject the notion that a general purpose computer and software would never be eligible for a patent," Kelley told the judges. "Adding a general purpose to an abstract idea is not a claim."
Williams & Connolly partner Adam Perlman argued on behalf of Alice Corp. He told the judges that the claim was valid because it did not restrict other forms of payment transaction, simply one that was superior.
"We have a computer that requires specialized programming," Perlman argued. "That creates a new machine."
Judge Timothy Dyk asked Perlman if there was another way to perform the transaction that met the international requirements, and that did not infringe upon the patent.
"I don't know the answer to your question," Perlman said. "We have claimed one particular way to exchange obligations. Nothing that we do in our claim prohibits others from doing it another way."
For more background on the case, check out this recent National Law Journal article.