Case Brief: CLS Bank v. Alice (Round 5)

By: Bill Harding

In a dissent from the court opinion filed in CLS Bank v. Alice Corp, Federal Circuit Judges Linn and O’Malley unceremoniously burst the bubble of several Amici who urged the court to use this case to undermine software patents.

In the process, the authors school their colleagues on the dangers of two judicial sirens:  extra-record fact finding and legislating from the bench.

 

CLS Bank Intl. v. Alice Corp.

598 F.3d 1336 (2013)

Dissent

Linn and O’Malley

RULE (Recommended):

Proposed patent-eligibility analysis

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

2a) Claims construction = meaningful limitations?

  • “[C]areful assessment of the claims—with all their limitations—which must guide our inquiry”

2b) Preemption (wholesale)?

  • subsumes all commercial uses or applications of that idea

REASONING:

Lourie opinion and Rader/Moore opinion both engage in claim constructions that are unsupported by the record

  • summary judgment granted in favor of CLS prior to construction of claims and attendant limitations (no Markman hearing)
      • no determination regarding how person of ordinary skill would understand the claims
      • no careful assessment of intrinsic record or prosecution history ever occurred
  • trial court avoided claims construction by construing claims as defendant Alice would have it do
    • Alice asserted a skilled artisan would assume “shadow credit” and “debit records” must be implemented electronically
    • CLS stipulated to construction favorable to Alice regarding electronic implementations of claimed methods
  • lower court proceedings and parties’ stipulations ignored
      • CLS agreed that, given the stipulations of both sides, the claims cannot be parsed (either all or none are patent eligible)
      • Rader/Moore construe “method claims as far broader than the system claims” such that they “merit different treatment”
      • Lourie contrues method claims broadly, then imports into the systems and media claims” the breadth he reads into the method claims”
      • Review must be premised on record below, where “relevant claim construction issues were vetted”
        • Claim construction is a question of law which Federal Circuit reviews de novo (Cybor Corp.)
        • “Whether review is de novo or not … it still must be a ‘review’ “
  • Rader/Moore opinion is flawed
    • Summarily rejected trial court assumption that method claims require same computer implementation as system claims
    • System claims supported by “numerous flowcharts that provide algorithm support for the functions recited in the claims.”
    •  “[B]arring an actual construction of the claims, we must assume the method claims are just as specific as the system claims, and merit the same treatment …”
  • Lourie opinion is flawed
    • “ignores the substance of the stipulations and assumptions upon which the proceedings … were predicated”
    • Begins instead “with identification of what he finds to be the fundamental concept ‘wrapped up in the claim.”
      • Not even a proper exercise in claim construction (wrong to strip claims of detail/limitations (Diehr))
      • “by starting with a paraphrased abstraction of the claims,” Lourie “preordains the method claims ineligible.”
      • “then reads into the system claims the same abstraction he felt damned the method claims.”
  • Regarding software patents
    • certain Amici expressed concern regarding “proliferation and aggressive enforcement of low quality software patents.”
    • “Congress can, and perhaps should, develop special rules for software patents.”
    • “[T]he answer is not to rewrite the law by broadening the abstract ideas exception to § 101, especially if the only way to do so is to ignore the limitations in the claims actually before us.”

As to Alice’s claims:

All claims stand or fall together (“either they are all patent eligible, or they are not”)

– claims are all grounded by the same meaningful limitations that render them patent eligible

– claims NOT all tainted by reference to the same abstract concept, as concluded in Judge Lourie’s opinion

— claimed data processing system “includes at least four separate structural components” that perform very specific functions

— to describe the system as an abstraction ignores what is claimed

– based on limitations, claims “do not preempt all commercial uses or applications of that idea”

PASS: Would employ the same rationale employed for the system claims to find the method and media claims patent eligible as well under § 101

JUDGMENT (Recommended):

  • Find all claims patent eligible, vacate lower court judgment, and remand for further proceedings

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