One might think that the issue of what qualifies as patentable subject matter has long been resolved by either the U.S. Court of Appeals for the Federal Circuit or the U.S. Supreme Court, particularly since the patent statute itself is explicit on the subject,1 and has been since 1952. One would be wrong, although excuses arguably exist. For instance, it certainly would be fair to point out that technology has evolved over time so it has been difficult to keep up—especially since 1952, and especially given the advancement of both the computer industry, with its speedy networks, devices and super chips (and gadgets), and the life sciences industry, with its enlightening predictive gene sequencing techniques and devices.
But should such advances cloak the fundamental need for a uniform, well-defined, highly regarded and respected standard or test for determining patent eligibility? After all, even this column has addressed the topic many times, starting back in 1998 (“‘State Street’: Virtually Anything Is Patentable” and “A Computerized Business Method Is Patentable Subject Matter”), in 1999 (“Broadened Scope of Protection”), then again in 2008 and 2010 discussing Bilski v. Kappas, and most recently on July 24, 2013, in reporting on CLS Bank v. Alice Corp.,2 recently appealed3 to the Supreme Court. Now comes another hotly divided Federal Circuit decision worthy of attention, Accenture Global Services and Accenture v. Guidewire Software, recently decided on Sept. 5, 2013.
In Accenture, at issue was whether claims directed to a system for generating tasks to be performed in an insurance organization should be eligible for patent protection under 35 U.S.C. §101. The Federal Circuit, in a 2-1 decision, with Judges Alan Lourie and Jimmie Reyna in the majority, and Chief Judge Randall Rader in the dissent, affirmed the district court’s summary judgment decision invalidating the claims at issue.
Claim at Issue
The representative claim at issue reads as follows:
A system for generating tasks to be performed in an insurance organization, the system comprising an insurance transaction database for storing information relating to an insurance transaction, the insurance transaction database comprising a claim folder containing the information related to the insurance transaction decomposed into a plurality of levels from the group comprising a policy level, a claim level, a participant level and a line level, wherein the plurality of levels reflects a policy, the information related to the insurance transaction, claimants and an insured person in a structured format; a task library database for storing rules for determining tasks to be completed upon an occurrence of an event; a client component in communication with the insurance transaction database configured for providing information relating to the insurance transaction, said client component enabling access by an assigned claim handler to a plurality of tasks that achieve an insurance related goal upon completion; and a server component in communication with the client component, the transaction database and the task library database, the server component including an event processor, a task engine and a task assistant; 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.
Thus, the claimed computer system had the following components: a transaction database, a task library database, a client component, and a server component including an event processor, a task engine and a task assistant, wherein the system applies certain rules to determine, populate and transmit particular tasks to be performed.
The district court, after the Supreme Court’s Bilski decision was rendered, granted summary judgment that the above system claim (and its counterpart method claim, which mirrored the system claim) were invalid under 35 U.S.C. §101 for claiming ineligible subject matter. More specifically, the claims were invalidated for being drawn to abstract ideas that fail the Supreme Court’s machine-or-transformation test (as not being tied to a particular machine or not transforming a particular article to a different state or thing).4
On appeal, the panel’s majority agreed, seemingly influenced by the appellant’s decision not to appeal the judgment as related to the method claims but only to the system claims, and citing the CLS Bank majority’s view that “system claims that closely track method claims and are grounded by the same meaningful limitations will generally rise and fall together.”5 As Judge Pauline Newman has said, “patent eligibility does not depend on the form of the claim…patent eligibility does not turn on the ingenuity of the draftsman.”6 In Accenture, because the method claims were invalidated and Accenture chose not to appeal the judgment as to those claims, and they were so closely alike to the system claims (with “insignificant” differences), the system claims also were found to be invalid.
The majority panel found the system claims invalid for a second reason, independent from the first, using the reasoning expressed by the plurality opinion of CLS Bank, which identified a two-step process, as follows:
First, the court must identify “whether the claimed invention fits within one of the four statutory classes set out in §101.” CLS Bank, 717 F.3d at 1282. Second, one must assess whether any of the judicially recognized exceptions to subject-matter eligibility apply, including whether the claims are to patent-ineligible abstract ideas. Id. (citing Mayo, 132 S. Ct. at 1302-03).
In the case of abstractness, the court must determine whether the claim poses “any risk of preempting an abstract idea.” Id. To do so the court must first “identify and define whatever fundamental concept appears wrapped up in the claim.” Id.; see also Ultramercial, 2013 WL 3111303, at *18 (Lourie, J., Concurring) (same). 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.” CLS Bank, 717 F.3d at 1282 (citing Mayo, 132 S. Ct. at 1300; Bilski, 130 S. Ct. at 3231; Diamond v. Diehr, 450 U.S. at 187).
Accordingly, in Accenture, the majority found the system claim invalid because it failed to “on its own, provide substantial limitations to the claim’s patent-ineligible abstract idea.” Following the plurality of CLS Bank, the majority identified the “abstract idea at the heart of system claim 1″ as “generating tasks based on rules…to be completed upon the occurrence of an event.” Then, it explored 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.”
In other words, are there “meaningful limitations restricting it to an application, rather than merely an abstract idea?” The answer to this question, according to the majority, must be more than “simply implementing an abstract concept on a computer” or even “limiting the application…to one field of use does not necessarily guard against preempting all uses of the abstract idea”—and “the complexity of the implementing software or the level of detail in the specification” does not help as the focus must be on the claims.
Guided by these principles, the majority ruled that the system claims at issue were like those claims presented and invalidated in CLS Bank (directed to a data storage system that received transactions, adjusted variables, and generated instructions) and in Bancorp7 (directed to a digital storage system). More specifically, the majority invalidated the system claims because they “contain only generalized steps of generating a task in response to events.”
Chief Judge Rader dissented. But not just that. Rader criticized the majority in several respects:
• by accusing the majority of “hunting for abstractions”;
• by emphasizing that CLS fails to carry “the weight of precedent”;
• by promoting “very unsound policy” and providing “weak” reasoning in its reliance on Accenture’s failure to appeal the invalidation of the method claims;
• by following “a procedure rejected almost unanimously by this court”; and
• by noting in conclusion:
[P]rior to granting en banc review in CLS Bank, this court commented: “no one understands what makes an idea abstract.” CLS Bank Int’l v. Alice Corp., 685 F.3d 1341, 1349 (Fed. Cir. 2012), opinion vacated, 484 F. App’x 559 (Fed. Cir. 2012) (internal quotations marks omitted). After CLS Bank, nothing has changed. “Our opinions spend page after page revisiting our cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter.” MySpace v. GraphOn, 672 F.3d 1250, 1259 (Fed. Cir. 2012); see generally CLS Bank. Indeed, deciding what makes an idea “abstract” is “reminiscent of the oenologists trying to describe a new wine.” My Space, 672 F.3d at 1259.
Accordingly, it is time for a principled, uniform and respected standard. Perhaps the Supreme Court will grant certiorari and provide just that.
Robert C. Scheinfeld is a partner and the head of the intellectual property group in the New York office of Baker Botts. Parker H. Bagley is of counsel in the New York litigation group of Boies, Schiller & Flexner.
1. 35 U.S.C. §101.
2. 717 F.3d 1269 (Fed. Cir. 2013); 106 USPQ2d at 1696.
3. 685 F.3d 1341 (Fed. Cir. 2012); 103 USPQ2d at 1297.
4. Bilski v. Kappos, 130 S. Ct. 3218 (Fed. Cir. 2010); 95 USPQ2d at 1001.
5. 2013 WL 4749919.
6. Id. at 717 F.3d at 1322.
7. Bancorp Servs. v. Sun Life Assurance of Can., 687 F.3d 1255, 1272 (Fed. Cir. 2012).