Last week, a sharply divided panel of the Federal Circuit ruled that certain claims asserted by Accenture were invalid as not directed to patentable subject matter. Accenture Global Services GmbH v. Guidewire Software, Inc.
Accenture had appealed a district court’s ruling that the claims of U.S. Patent No. 7,013,284 were invalid as not directed to patentable subject matter. The district court had ruled that system claims 1-7 were invalid, as were method claims 8-22. Accenture only appealed the ruling on the system claims, not the method claims.
The system claims were directed to computer programs for handling insurance related tasks. The system claims include a combination of computer components including an insurance transaction database, a task library database, a client component, and a server component, which includes an event processor, a task engine, and a task assistant.
Judge Lourie, joined by Judge Reyna, issued the majority opinion that the system claims were indeed invalid. He relied extensively on the court’s plurality opinion in CLS Bank. He argued that CLS Bank set forth a two step process for determining patent eligibility. First, the court must determine whether the claimed invention falls within one of the statutory classes set forth in § 101. Then, the court must determine whether the claim falls within one of the judicially-created exceptions, such as being an abstract idea. Does the claim pose a risk of preempting an abstract idea? Does the claim contain “additional substantive limitations . . . narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself”?
Next, Judge Lourie argued that the majority of the judges in CLS Bank had reasoned that when the system claims closely track the method claims and do not add additional meaningful limitations, they will rise and fall together. He seemed to argue that because the method claims were not appealed–and the determination of their ineligibility is therefore conclusive–that Accenture is now estopped from arguing that the system claims are patent eligible. He then proceeds to dismiss each of the limitations listed above that are not included in the method claims as “minor differences in terminology.”
Accenture also argued for reversal in light of the court’s upholding the claims in Ultramercial v. Hulu. Interestingly, the panel in that case also included Judge Lourie and Chief Judge Rader. The difference was that the third member was Judge O’Malley, instead of Judge Reyna. How much of a difference does panel composition make to the outcome of these cases? In any event, Judge Lourie distinguished Ultramercial based on the fact that in that case, there had not yet been claim construction or discovery. The procedural posture of the case must make all the difference.
Not surprisingly, Chief Judge Rader issued a vigorous dissent. He argued against every point that Judge Lourie made. Every claim can be stripped down to its core and characterized as an abstract idea. CLS Bank was not a precedential decision, as it did not garner a majority of the court. Therefore, the court cannot rely on it.
The failure of Accenture to appeal the method claims does not estop it from arguing that the system claims are patent eligible. No precendent requires such a result. Parties should be encouraged to narrow issues for appeal, not required to appeal every issue for fear of estoppel.
System and method claims do not necessarily stand or fall together. They must be analyzed separately, as reaffirmed by Ultramercial. A nearly unanimous court has rejected this procedure.
Finally, Judge Rader reviewed the claim limitations themselves and would find the claims to be patent eligible. He notes that through these opinions the court has not provided any guidance on what is and what is not patent eligible subject matter.
The patentable subject matter debate is getting ridiculous to the point that it is nearly impossible to advise clients as to what is and what is not patent eligible. How do you tell your client that it depends on which judges comprise the panel when your case is appealed to the Federal Circuit? Let’s knock off all the nonsense and use the other provisions of the statute to eliminate patents that are not novel, are obvious, or are abstract.