Key Case About Software Patents May Hinge On How You Define 'Significantly More'

from the who-did-what-now dept

Last year, we wrote about the next important lawsuit concerning software patents, the CLS Bank v. Alice case, which the full Federal Circuit appeals court (CAFC) heard today. Our last post on the case provided the background, but the short version was that it involves some software concerning doing a "shadow transaction" to see if there are really enough funds to complete a transaction, before completing the actual transaction. The district court found that this was just a representation of an abstract idea, and thus not patentable. CAFC, using a typical three judge panel, reversed that decision, saying that it was patentable subject matter. However, CAFC agreed to rehear "en banc" with the entire 10 judges, because there was some concern about the original ruling (which was split 2 against 1).

I've spoken to two people who were at the hearing this morning, and some other reports are trickling out as well. As always, what gets covered in the oral hearings is not always as indicative of how the court will rule as many people hope. Often times, what is discussed in the hearing may end up being a side item in the eventual decision, which considers a lot more information, usually from the various briefs filed by the key parties and amicis (friends of the court). And this case had a lot of "friends" on all sides. If you'd like to understand the full arguments, the Patent Progress blog has a good summary of the arguments.

Either way, lots of folks recognize that this is a key case for software patents and apparently there was a packed house, with lots of patent lawyers and Patent Office folks in attendance. There was plenty of discussion concerning what makes something an abstract idea vs. a specific implementation of an idea. Alice Corp. (the patent holder) argued that its patent was really on just a "specific way" of doing such net settlement transactions, but had trouble answering the question of whether or not it was possible to do a net settlement transaction without violating the patent.

One of the key questions that CAFC is supposed to answer in the case is:
What test should the court adopt to determine whether a computer implemented invention is a patent ineligible “abstract idea”; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?
Here, apparently, the parties actually seemed to more or less agree that the "test" is a "significantly more" test -- and whether or not the computers are doing "significantly more" than just speeding up a process that could be done in one's head or with pencil and paper. A lot of this test is built on last year's ruling in the Prometheus Labs. v. Mayo Labs case concerning medical diagnostics patents, and that case was discussed a fair amount during the hearing (though that case involved doing "significantly more" than laws of nature, rather than general computing).

Lawyer Bob Sachs, a patent lawyer from Fenwick and West who was at the hearing today, told me that the "significantly more" test worries him, in that it's not an "objective test" and effectively leaves too much to chance. "It's a way of saying 'we can't figure this out.'" He also noted that the "significantly more" test may favor the idea that this particular patent is legitimate, since the patent in question was much more detailed and involved than your average software patent. That said, in his early handicapping of the field, he comes up with a 5 judge to 5 judge tie, based on their perceived opinions and the sorts of questions they were asking, so he's wondering if it'll end up that way or if any of the judges will swing to the other side.

While Sachs was disappointed that there wasn't a clear attempt to define what constitutes an "abstract idea," I'm not as sure that's an issue. In fact, it almost seems oxymoronic to say that you need a strict definition of an abstract idea. The reason an idea is abstract is just that: it's abstract. But, at the same time, I can understand why patent lawyers would generally prefer a brightline, objective rule that can demarcate what is and what is not patentable. Either way, lots of patent lawyers will be waiting eagerly for this ruling.

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  1. identicon
    Anonymous Coward, 9 Feb 2013 @ 1:06pm


    A description of how to find the lowest common factor of two numbers describes an abstract algorithm. That is a procedure that could be carried out by mental arithmetic. While carrying out this algorithm for very large numbers by mental arithmetic, or even with the aid of pen and paper, is not very practical, the algorithm is still abstract when implemented on a computer.
    A description of how to make a cup os coffe describes a concrete process, that is a manipulation of physical matter. To implement this on a computer would reuire the robotic devices to carry ouit the necessary real world operations.
    Does that help in telling the difference between abstract and concrete.
    Also not most algorithms, that is computer programs are abstract, and any real world manipulation is a replacement for pen and paper. That is use of keyboard, mouse, screen and printer.

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