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Tuesday, 10 September 2013 00:36

Uncertainty of 101 Patent Eligibility Continues in Accenture v. Guidewire

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Four months after the CLS Bank v. Alice opinion, the Federal Circuit continues to struggle with subject matter eligibility of computer-related inventions under § 101 of the U.S. patent laws. In Accenture Global Services, GMBH v. Guidewire Software, Inc. (Fed Cir. 2013), Chief Judge Rader and Judge Lourie continue their disparate dialog that began in CLS Bank Int'l v. Alice Corp, and continued in Ultramercial Inc. v. Hulu LLC. However, contrary to the result in Ultramercial, here the party arguing against eligibility of computer programs won out.

The action involved Accenture's U.S. Patent No. 7,013,284, a patent directed to concepts for organizing data in the insurance industry. The claims on appeal were related only to system claims (claims 1-7). The majority opinion, authored by Judge Lourie, agreed with the district court that the claims were patent ineligible because: (1) the system claims offer no meaningful limitations beyond the method claims that have been held patent-ineligible; and (2) even when considered on their own, the system claims fail to pass muster under Prometheus and the plurality opinion in CLS Bank.

Specifically, the majority first compared the system claims to the method claims and relied upon the plurality opinion in CLS Bank v. Alice, where the proper approach is to "compare the substantive limitations of the method claim and the system claim to see if the system claim offers a 'meaningful limitation' to the abstract method claim, which has already been adjudicated to be patent-ineligible." The court found no additional meaningful limitation in the system claims, and thus found the claims to be similarly patent ineligible.

The majority also concluded that the method claims were patent ineligible standing alone. Here, Judge Lourie relied upon his own "inventive concept" analysis first set forth in his plurality opinion in CLS Bank v. Alice. This analysis requires -- for an invention involving an abstract idea -- that one needs to first "identify and define whatever fundamental concept appears wrapped up in the claim so that the subsequent analytical steps can proceed on a consistent footing." Next, one needs to evaluate the claim to determine whether it contains additional limitations that "narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself."

In comparing claim 1 to claims Judge Lourie found patent ineligible in CLS Bank, as well as those he found patent eligible in Ultramercial, Judge Lourie found Accenture's claim 1 to be more similar to those in CLS Bank. This was because the system claim in CLS Bank was also directed to a general purpose computer, which first adjusted values stored in a database, then generated instructions. In contrast to Ultramercial, Judge Lourie argued that the Ultramercial claim contained "additional limitations from the abstract idea of advertising as currency" including "transaction to an Internet website, offering free access conditioned on viewing a sponsor message, and only applying to a media product." Importantly, Judge Lourie also noted that the procedural posture in Ultramercial (on review of a 12b6 motion) required the Court to adopt a construction most favorable to the patentee.

Writing for the dissent, Judge Rader disagreed with the majority on the basis that the framework relied upon by the majority was not percedential. Judge Rader argued that "no part of CLS Bank, including the plurality opinion, carries the weight of precedent." He disagreed that the system claims in this case should have been compared to the invalid method claims, and characterized it as estoppel which would require litigants to appeal each and every claim to avoid risking the potential of estoppel or waiver of other claims.

Judge Rader continued to stand by his strong textualist views, arguing that the statute offers broad categories of patent-eligible subject matter which should be construed liberally. "The 'ineligible' subject matter in these system claims is a further testatment to the perversity of a standard without rules--the result of abandoning the statute," he concluded.

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Tony Guo

As a specialized technology counsel, Tony supports his clients in the high tech, creative, and online industries. His primary areas of practice include intellectual property protection, Internet law, and startups. Tony is a USPTO registered patent attorney, as well as a licensed lawyer in California and Florida. He comes from a background involving considerable hardware and software development experience, having worked in both development and IT roles in the tech and finance industries.