Court Ruling Opens The Door To Rejecting Many Software Patents As Being Mere 'Mental Processes'

from the nice-to-see dept

Well, this is getting interesting. Last year, when the Supreme Court ruled very narrowly in the Bilski case, without making any explicit statement (as precedent) on overall software or business model patents, many people were frustrated. Here was a situation where the Supreme Court could have drawn a much clearer map, but it declined to do so. Of course, we wondered if this would just mean that another case would have to make its way to the Supreme Court to get a clearer ruling on software patents. In effect, with Bilski, the Supreme Court basically said "this one test you use is fine, but it's not the only test." It didn't say what those other tests should be, but basically left it up to the courts to decide. However, it did reject the specific Bilski patent for being an "abstract" idea, saying that this was not patentable under Section 101 of the Patent Act.

What's been interesting is that this seems to have emboldened a few judges to apply new or different tests (with clear reasons and caselaw for why they do so)... and some of this is leading to more software patents getting rejected. In a new ruling at the Federal Circuit appeals court (CAFC), the court appears to open up a potentially broad path for rejecting all sorts of bad (mostly software) patents by deciding that the Supreme Court's Bilski ruling might not have been so narrow after all.

The specifics are pretty down in the patent law weeds, but the key thing is that the court, as the Supreme Court did in Bilski, uses Section 101 of the Patent Act to invalidate some patent claims. This gives the court pretty broad leeway in how patents can be evaluated under that section -- again by claiming that they're merely "abstract ideas," not patentable under Section 101. Most rulings on patent validity focus on obviousness, prior art or whether or not it meets the basic fundamental rules for how a patent is written. But by opening up Section 101 to wider scrutiny, the court is making it much easier for other courts to reject patent claims, and the court is suggesting that this is a reasonable approach as an alternative test under the Bilski ruling. Basically, CAFC is turning the narrow Supreme Court ruling into a much broader one, and saying to the USPTO and courts that patents on "abstract ideas," broadly defined, should be unpatentable... and then noting that many "software" ideas may be merely abstract ideas.

It seems like perhaps CAFC is getting the message that there are a ton of bad software patents out there, and using Section 101, it's just made it a lot easier for the USPTO and the courts to dump a lot of those patents. All the USPTO or courts have do now is show that the software claim is nothing more than an abstract idea. In this case, the claims in question concerned a patent from CyberSource about doing fraud prevention online by matching your transaction information to your IP address to see if that IP was an indication of potential fraud. As the court noted, there's nothing about doing such a comparison that is anything more than an abstract idea, and, in fact, you don't need a computer or anything to do this at all. It could just be done by a human being and thus, it's not patentable under Section 101. Specifically, the court is rejecting it as a mere "mental process."
It is clear that unpatentable mental processes are the subject matter of claim 3. All of claim 3’s method steps can be performed in the human mind, or by a human using a pen and paper. Claim 3 does not limit its scope to any particular fraud detection algorithm, and no algorithms are disclosed in the ’154 patent’s specification. Rather, the broad scope of claim 3 extends to essentially any method of detecting credit card fraud based on information relating past transactions to a particular “Internet address,” even methods that can be performed in the human mind
The court further clarifies the ability to reject bogus software patents by dismantling the usual attempts to make a software patent seem legit by saying it happens "on a computer." Basically, it finds that taking a "mental process" or abstract idea and merely having it happen on a computer is not patentable.

This is potentially a big deal, though you have to imagine it will be appealed. When the Bilski ruling came out, we expected another software patent question would eventually reach the Supreme Court, and this could be an interesting one if the Court decides to take it. In the meantime, though, the USPTO and district court should be on alert that they have pretty broad leeway in rejecting software patents if they're really just "mental processes" not patentable under Section 101 (even if they're done on a computer).

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  1. identicon
    6, 17 Aug 2011 @ 1:27pm

    Let me explain this case a bit better than Mike has above.

    There are 2 claims especially at issue. One is to a method. The other is to a "computer readable medium" (aka a cd, a harddrive etc). The court does the expected thing in invalidating the method claim as directed to a mental process that takes place entirely in the mind, aka a "mental process" which the court notes is a subset of "abstract ideas".

    However, in a surprising move, the court construed the claim to a CRM (cd etc. remember?) as actually being a claim to the method which the instructions supposedly on the CRM would cause a computer to do. The steps of this method were recited in the claim. The court then noted that the method was simply the same method as in the method claims and that they were going to consider the CRM claim a claim to a method for purposes of deciding 101. This right here is probably legal error.

    Nevertheless, the same result may be achieved, that is, the CRM claims may be invalidated, under the Bilski abstract idea analysis even without considering the CRM claims to be claims to a method.

    The chances of this case getting picked up for appeal to the en banc CAFC court or the USSC are kind of small, but I personally hope that it does get picked up. Personally I believe they should not have committed what I note above is likely legal error. Instead they should have invalidated the CRM claims under any number of other ways, possibly even using 101.

    As to why this decision happened, one must remember that there are different judges on the CAFC. 9 or 10 of them to be exact atm. Some of the judges like to rule a certain way, and others like to rule a different way. The people that decided this case are a different group of judges from another group of judges that would probably try to decide this case differently and possibly even hold the CRM claims patentable.

    On the other hand, pretty much all judges would probably invalidate the method claims. Although I personally do not comment on whether the claims are in fact valid or invalid, as that is a question for a court.

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