Bancorp Services: To patent system claims, the computer must be “integral to the invention”

Just last week, in a post about software patents I noted that Federal Circuit decisions over the past year have applied inconsistent standards to patent-eligibility of software.   Last week the Federal Circuit kept the confusion alive in a new decision that struck down a patent covering an automated life insurance management method and system.  In  Bancorp Services L.L.C. v. Sun Life Assurance Company of Canada (No. 2011-1467, July 26, 2012), the court considered patent claims such as the following:

1.  A life insurance policy management system comprising:
   a policy generator for generating a life insurance policy including a stable value protected investment with an initial value based on a value of underlying securities of the stable value protected investment;
   a fee calculator for calculating fees for members of a management group which manage the life insurance policy;
   a credit calculator for calculating credits for the stable value protected investment of the life insurance policy;
   an investment calculator for determining an investment value and a value of the underlying securities of the stable value protected investment for the current day;
   a policy calculator for calculating a policy value and a policy unit value for the current day;
   digital storage for storing the policy unit value for the current day; and
   a debitor for removing a value of the fees for members of the management group which manages the life insurance policy.

The patent also contained several method claims, which the court found did not actually require a computer to perform.

The Court struck down all of the claims as ineligible for patenting under 35 U.S.C. § 101.  Regarding the system claims, which expressly recited a computer, the Court stated that “[t]o salvage an otherwise patent-ineligible process, a computer must be integral to the invention, facilitating the process in a way that a person making calculations or computations could not.”

Thus, only three weeks after stating (in CLS Bank International v Alice Corporation Pty. Ltd.) that a claim should not be held patent-ineligible unless it is “manifestly evident” that the claim covers an abstract idea, the Court appeared to reach an opposite conclusion.  In CLS Bank, the Court stated

Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible “abstract idea” under 35 U.S.C. § 101.

In Bancorp Services the Court attempted to reconcile its result with that of CLS Bank by stating that “under . . . CLS, a machine, system, medium, or the like may in some cases be equivalent to an abstract mental process for purposes of patent ineligibility.”

Exactly what cases those will be is not entirely clear from the Court’s decisions.  Until the Court (or perhaps the Supreme Court) issues a single guiding principle for patent eligibility, software patent applicants should continue to present a variety of claims — including those focusing on specific applications of the software, and steps that cannot be simply performed by a human — in order to put their patents in the best possible position for being upheld.

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