CAFC Tries to Harmonize Natural Law… And Patents

by Adam Philipp on May 21, 2013

Ten jurists attempt
To provide coherent law
"Let the Supremes try!"

cafc1Early jurisprudence of the Court of Appeals for the Federal Circuit (CAFC), the patent appellate court, suggests that the court was attempting to lower the bars to obtain a patent, including an expansion of what could be considered eligible patent subject matter; i.e., the threshold determination of what ‘things’ can or cannot be considered as patentable.

Ostensibly, the law would seem to be somewhat broad: including within the scope of patentable subject matter "any new and useful process, machine, manufacture, or composition of matter." But now, in addition to some early judicial exceptions to patentable subject matter (i.e., it can not be an abstract idea, law of nature or natural phenomena), the courts have begun to narrow down patentable subject matter from an early eighties concept of "anything under the sun that is made by man."
Software may be the latest victim of this effort.

In its recent May 2013 decision in CLS Bank v. Alice Corp, the CAFC struggled mightily to harmonize Supreme Court precedent on this matter–as evidenced by the 7 separate opinions over 135 pages, in an attempt to determine if and when software ought to be patentable subject matter.  Under current law software is patentable subject matter, provided that the software is, for example, tied to a machine (e.g., a computer CPU), or transforms something from one state to another.

The patents at issue, covering computer systems designed to create a third-party intermediary to reduce risk in financial transactions, e.g., computer facilitated escrow accounts, were found to be unpatentable by default:  the lower court ruling against patentability –initially reversed by a now vacated CAFC panel of three judges, still stands because the CAFC was unable to provide a majority decision. 

Reviewing the opinions we can discern that chief among the CAFC’s concerns in outlining what is and what isn’t patentable subject matter in the software sphere, is the idea that a patent should not preempt a law of nature: the patent should not provide monopolistic control over the entirety of a natural law, but rather, limitations incorporated into the patent claims must serve to provide real constraints on the patentees’ ability to fully control the idea. You have to do more than just state a natural law and add the words "apply it". Here, the court was concerned that the limitations in Alice’s patents, i.e., those standard limitations provided in most software patents, failed to meaningfully limit the monopoly over the abstract idea. 
Should this interpretation indeed become the law, it could, in the words of Judge Moore, mean the "death of hundreds of thousands of patents, including all business method, financial system, and software patents."

As an aside, the case was decided relatively quickly in contrast to earlier patentable subject matter cases. Perhaps this fast turnover is intended allow the Supreme Court to incorporate an overarching but useful and realistic set of guidelines in its anticipated ruling on whether genes are patentable subject matter.
No matter the eventual outcome, what was once a sleepy gate keeper that let most inventions in, the bar of whether the invention is patentable subject matter is now becoming an important consideration in patent litigation and a more difficult hurdle in gaining patent protection.

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