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Instead, the court issued six opinions, which each differ to varying degrees on the proper test for determining patent-eligible subject matter under ' 101. The main opinion authored by Judge Alan D. Lourie and joined by Judges Timothy B. Dyk, Sharon Prost, Jimmie V. Reyna and Evan J. Wallach reasoned that the test should be a flexible claim-by-claim analysis that focuses on whether the claims add “significantly more” to a basic abstract concept. Id. at 16. And, for each of the claims-at-issue, the main opinion found that “[t]he concept of reducing settlement risk by facilitating a trade through third-party intermediation is an abstract idea because it is a 'disembodied' concept, a basic building block of human ingenuity, untethered from any real-world application. Standing alone, that abstract idea is not patent-eligible subject matter.” Id. at 26 (internal citation omitted).'

Meanwhile, Chief Judge Randall R. Rader (in the second opinion) authored a concurrence-in-part (with respect to the method and computer-readable medium claims) and dissent-in-part (with respect to the system claims) that was joined by Judges Richard Linn, Kimberly A. Moore and Kathleen M. O'Malley. According to Chief Judge Rader's opinion, “any requirement for 'inventiveness' beyond sections 102 and 103 is inconsistent with the language and intent of the Patent Act.” Rader Op. at 11. Furthermore, the opinion went on to conclude that the system claims were patent-eligible subject matter because “[t]he 'abstract idea' present here is not disembodied at all, but is instead integrated into a system utilizing machines.” Id. at 38.

Nevertheless, no precedential opinion was reached as to what the proper test should be for patent-eligible subject matter under ' 101 with respect to any type of claim. The remaining opinions discussed various additional concerns regarding ' 101.

Howard J. Shire is a partner and Bradley Roush is an associate in the New York office of Kenyon & Kenyon LLP.

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Software Patent Does Not Qualify As Patent-Eligible Subject Matter

On May 10, 2013, the Federal Circuit in CLS Bank International v. Alice Corporation (2011-1301), issued an en banc per curiam order affirming the district court's ruling that Alice's software patents were not directed to patent-eligible subject matter under 35 U.S.C. ' 101. Per Curiam Order at 6-7. Alice's patents related to financial-services software that reduced settlement risk by facilitating a trade through third-party intermediation. Lourie Op. at 10. Meanwhile, the claims in Alice's patents were of three types: 1) method claims, 2) computer-readable medium claims, and 3) system claims. Id. at 2-4.

The per curiam order is the only precedential portion of the decision; no precedential decision was reached with respect to any other issue. See Id. at 2, n. 1. Seven of the 10 judges found that the method and computer-readable medium claims were not patent-eligible subject matter. However, only five judges found that the system claims were not patent-eligible subject matter. Id. Furthermore, eight judges agreed that all three types of claims “should rise or fall together in the ' 101 analysis.” Id.

Instead, the court issued six opinions, which each differ to varying degrees on the proper test for determining patent-eligible subject matter under ' 101. The main opinion authored by Judge Alan D. Lourie and joined by Judges Timothy B. Dyk, Sharon Prost, Jimmie V. Reyna and Evan J. Wallach reasoned that the test should be a flexible claim-by-claim analysis that focuses on whether the claims add “significantly more” to a basic abstract concept. Id. at 16. And, for each of the claims-at-issue, the main opinion found that “[t]he concept of reducing settlement risk by facilitating a trade through third-party intermediation is an abstract idea because it is a 'disembodied' concept, a basic building block of human ingenuity, untethered from any real-world application. Standing alone, that abstract idea is not patent-eligible subject matter.” Id. at 26 (internal citation omitted).'

Meanwhile, Chief Judge Randall R. Rader (in the second opinion) authored a concurrence-in-part (with respect to the method and computer-readable medium claims) and dissent-in-part (with respect to the system claims) that was joined by Judges Richard Linn, Kimberly A. Moore and Kathleen M. O'Malley. According to Chief Judge Rader's opinion, “any requirement for 'inventiveness' beyond sections 102 and 103 is inconsistent with the language and intent of the Patent Act.” Rader Op. at 11. Furthermore, the opinion went on to conclude that the system claims were patent-eligible subject matter because “[t]he 'abstract idea' present here is not disembodied at all, but is instead integrated into a system utilizing machines.” Id. at 38.

Nevertheless, no precedential opinion was reached as to what the proper test should be for patent-eligible subject matter under ' 101 with respect to any type of claim. The remaining opinions discussed various additional concerns regarding ' 101.

Howard J. Shire is a partner and Bradley Roush is an associate in the New York office of Kenyon & Kenyon LLP.

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