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Case Brief: CLS Bank v. Alice (Round 4)

Another day, another case brief of an opinion filed in CLS Bank v. Alice Corp.  Today’s fare is the concurrence-in-part and dissent-in-part authored by Federal Circuit Judge Newman, who takes the “Memory Lane” award for citing precedent from 1958, … and 1939, … and 1813.  Did you know that “patent” is derived from the latin “patere,” which means “to lie open”?

(Yeah, she went there.)

CLS Bank Intl. v. Alice Corp.

598 F.3d 1336 (2013)

Concurrence-in-part, Dissent-in-part


RULE (Recommended):

Proposed patent-eligibility analysis:  return to the statute as written, “unanalyzed and undefined” (Newman at Page 11)

1) Claim to eligible subject matter?

  • Categories: processes, machines, manufactures, and compositions of matter

2) Claim barred by judicially-created exception?

  • laws of nature, natural phenomena, and abstract ideas


– Proposed that the court return to three basic principles relating to § 101

1. § 101 is an inclusive statement of patent-eligible subject matter

2. The form of the claim does not determine section 101 eligibility

3. Experimental use of patented information is not barred

Court has failed by propounding at least three incompatible standards for § 101 patent eligibility (abstraction, preemption, and meaningful limitation)

  • § 101 is not appropriate for determining patentability; eligibility is merely membership in the inclusive list of “useful arts” (coarse filter)
  • subsequent substantive criteria (statutory rigors) of patentability will eliminate claims that are “abstract” or “preemptive”

— laws of novelty, utility, prior art, obviousness, description, enablement, and specificity

  • “An all-purpose bright-line rule for the threshold portal of section 101 is an unavailable as it is unnecessary.”


The courts, the popular press, and the public misunderstand patent policy:  purpose of disclosure is to produce, not restrict, further study and experimentation

  • No substitute has been devised for the incentive of profit opportunity through market exclusivity
  •  “[t]he federal patent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful, and unobvious advances in technology and design in return for the exclusive right to practice the invention for a period of years.” (Bonito Boats)
  • “The disclosure required by the Patent Act is ‘the quid pro quo of the right to exclude.’” (Kewanee Oil)
  • “It could never have been the intention of the legislature to punish a man, who constructed such a machine merely for [scientific] experiments, or for the purpose of ascertaining the sufficiency of the machine to produce its described effects.” (Whittemore, 1813)
  • “Innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites in a patent system.” (Graham)

— “useful knowledge” cannot mean that the knowledge disclosed in patents is untouchable for seventeen years (Newman at Page 6)

  • “patenting does not deprive the public of the right to experiment with and improve upon the patented subject matter.” In re Rosuvastatin Patent Litig., 703 F.3d 511, 527 (Fed. Cir. 2012)
  • Newman offers rejection of contrary theory from Embrex, Inc. v. Service Engineering Corp., 216 F.3d 1343, 1349 (Fed. Cir. 2000)
        • experimental use defense was “very narrow” and unavailable when “the inquiry has definite, cognizable, and not insubstantial commercial purpose”
        • concurrence added that “neither the statute nor any past Supreme Court precedent gives any reason to excuse infringement because it was committed with a particular purpose or intent, such as for scientific experimentation …”

–         Judge Newman posits that experimental use of patented information can take various forms, including:

  • a. experiments to improve or build upon patented subject matter
  • b. experiments to compare patented subject matter with alternatives to determine relative performance and properties
  • c. experimental study of patented subject matter to understand its mechanism
  • d. experimental study of patented subject matter to find new applications or modifications

Form of the claim (Newman at Page 12)

  • “it cannot be that computer-implemented developments may or may not be eligible under section 101 depending on how broadly they are sought to be claimed.”
  • “Breadth of claiming, and undue breadth, are determined under sections 102, 103, and 112, not section 101.”

As to Alice’s claims

All claims stand or fall together

–         the escrow banking mechanism is claimed as a method or a system or a media device

  • the form of the claim does not determine section 101 patent eligibility
  • nor does the scope of the claim determine eligibility

PASS: All claims are eligible under § 101

JUDGMENT (Recommended):

  • Remand all claims to district court for determination of patentability under the substantive provisions of the statute


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