Rader's Olive Branch: <i>Ultramercial II</i> Resolves the Judicial Deadlock of <i>CLS Bank</i>

The Federal Circuit's en banc decision in CLS Bank Int'l v. Alice Corp., __ F.3d _ , No. 2011-1301, 2013 WL 1920941 (Fed. Cir. May 10, 2013) was roundly criticized as a “nightmare,” further cementing the impression that the court was confused and in conflict over the requirements of patent eligibility under 35 U.S.C '101. The six non-precedential opinions were seen as leaving patent applicants and owners alike without guidance, let alone predictability, as to whether their patents were valid. Alice Corp.'s patents cover computer-implemented methods and systems for a third-party intermediary to ensure real-time settlement of currency exchange transactions between counterparties. Judges Lourie, Dyk, Wallach, Reyna and Prost appeared to take a hard stand against such software-based financial inventions, finding that neither the method nor system claims were patent-eligible. Under Lourie's “integrated approach,” the patent claims lacked any “meaningful limitations” and thereby preempted all “practical applications” of the abstract idea of third-party settlement. Taking a middle position, Judges Rader, Moore, Linn and O'Malley agreed that the method claims were not patent-eligible, but argued that the system claims were patent-eligible because they contained limitations that were not necessary and inherent in the abstract idea. At the other end of the bench, Judges Linn and O'Malley argued that the method claims were indeed patent-eligible because they included limitations that prevented the claims from being “unduly preemptive.”