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The Battle Rages On: A Report from the Front Line of the Patentable Subject Matter War

BY Robert R. Sachs
August 30, 2012

In July 2012, the Federal Circuit issued two decisions regarding patentable subject matter for computer-implemented business methods, CLS Bank Int'l v. Alice Corp., No. 2011-1301 (Fed. Cir. July 9, 2012), and Bancorp Services v. Sun Life Assurance Co. of Canada, No. 2011-1467 (Fed. Cir. July 26, 2012), that vividly demonstrate the conflicting approaches various members of the court apply to this question. On what appears to be similar business methods patents, the two panels came to opposite decisions ' the CLS panel finding the claims patent-eligible, and the Bancorp panel holding not. The decisions can be reconciled when considered in light of the adequacy of the respective patent disclosures. From a strategic perspective, the decisions reinforce the need for substantively robust specifications that do more than nominally describe the use of a computer in the performance of a business method.

Many Similarities

There are many similarities between the cases. First, both cases involved business methods patents related to risk management. Alice Corp.'s patents cover a trading system in which counter parties exchange various types of contractual future obligations (e.g., supply and delivery contracts), and where the system automatically matches offers between various counter parties so that each party's risk is minimized at the time the contracts mature. The specific claims at issue include the feature of a third party that manages the exchanges between the counter parties, using a particular record-keeping format based on “shadow” credit and debit records.

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