Subject Matter Patentability Called Into Question Again In CLS Bank and Myriad Cases

Courts cast dark cloud over subject matter patentability of software and isolated DNA as the Supreme Court grants certiorari for the second time in the case of Ass’n for Molecular Pathology v. Myriad Genetics and the Federal Circuit grants an en banc hearing to rethink the wisdom of its earlier decision in CLS Bank International v. Alice Corporation. The earlier decisions in both cases upheld the subject matter patentability of isolated DNA and software, respectively.

The tension may never have been greater between the Supreme Court and the Federal Circuit than now. Twice over a two year period, the Supreme Court has issued guidance on §101 subject matter patentability in the Bilski and Prometheus cases. Yet the Federal Circuit has yet to find a way to square the analysis it uses in its decisions with the guidance the Supreme Court has provided.

With our amicus filing in CLS Bank yesterday, we encourage the courts to arrive at a predictable boundary for determining the patent-eligibility or ineligibility of software, as well as diagnostic methods.

Subject Matter Patentability of Software in CLS Bank

On October 9, 2012, the Federal Circuit granted a petition for rehearing en banc filed by CLS Bank International and CLS Services Ltd. in connection with the subject matter patentability of software. The rehearing allows the full court to take a fresh look at the CLS Bank decision rendered by the three judge panel of Judges Linn, Prost, and O’Malley on July 9, 2012. That panel held that software claims directed to managing trading risk are patent eligible subject matter and reversed the district court granting of summary judgment to the contrary. Circuit Judge Linn wrote the opinion of the court with Circuit Judge Prost dissenting.

The en banc rehearing signals the tension that may exist between the Federal Circuit and the Supreme Court with respect to the subject matter patentability of software patents. In this regard, the Federal Circuit has shown a bias toward upholding software patents, to the point of impermissibly importing limitations into broad claims.

The earlier CLS Bank decision appears to have done just that when importing computer application specific limitations into the software claims in order to make the claims application specific. As we wrote in our blog Subject Matter Patentability of Software–Need for a Markman Hearing, precisely this kind of impermissible importing of limitations into claims is one reason the Federal Circuit was reversed by the Supreme Court in Prometheus. The en banc hearing in CLS Bank may be an acknowledgement by the Federal Circuit of this error and that absent finding an analytical framework that squares its decision in CLS Bank with the Supreme Court precedent, this decision of the Federal Circuit too will be reversed by the Supreme Court.

There are two questions to be decided by the Federal Circuit on rehearing:

  • What test should the court adopt to determine whether a computer-implemented invention is a patent ineligible abstract idea; and when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?
  • In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as a method, system, or storage medium; and should such claims at times be considered equivalent for § 101 purposes?

The issue of the appropriate test to use in determining subject matter patentability is an important one for the software industry, our clients, and our professional colleagues; and one that we at Juhasz Law have written about extensively.  We are happy to report that on December 4, we filed an amicus brief with the court proposing the adoption of the “physical” and “virtual” links test for determining whether or not a software patent preempts an abstract idea. We find this test to be an effective indicator of preemption and hope that the court agrees with our recommendation.

To see how the software claims in the CLS Bank case fare under this test, read the amicus brief.

Subject Matter Patentability of Isolated DNA in Myriad

On Friday, November 30, 2012, the Supreme Court. granted the petition of Ass’n for Molecular Pathology for a writ of certiorari. This will be the second time that this case is before the S. Ct. The first time, the S. Ct. remanded the case to the Federal Circuit for reconsideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012). This time, the certiorari has been limited to the following question “1.  Are human genes patentable?” The certiorari signals the tension that exists between the Federal Circuit and the Supreme Court with respect to the subject matter patentability of isolated DNA.

This matter is likely before the S. Ct. because earlier, on remand, the Federal Circuit, once again decided the subject matter patentability of the isolated DNA claims under Chakrabarty, effectively “cleaving” out the analytical backbone of the S.Ct.’s Prometheus case from its decision upholding the subject matter patentability of isolated DNA. This despite the S. Ct. decision in Prometheus being the reason for the S. Ct. remand. The District Court had invalidated the isolated DNA claims.

As we stated in our earlier blog,

“the Myriad 2 decision has provided insight into how “cleaving of the covalent bond” in the backbone of the natural DNA to form the isolated DNA supports subject matter patentability under Chakrabarty. The patent community now needs to understand how “cleaving of the covalent bond” supports subject matter patentability under a Prometheus-like analysis. For example, is “cleaving of the covalent bond” to isolate DNA an insignificant extra-solution activity? Or is “cleaving of the covalent bond” something that makes the isolated DNA less naturally occurring (e.g., less a “law of nature/manifestation of nature”) so as to avoid preemption? It seems now that these questions have been left for the S. Ct. to decide.”

Now we will get that answer.

About Juhasz Law

The Juhasz Law Firm can help you to better understand the effect of these cases on your patents. For more information regarding how these cases may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents, rely on Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon (sm).

For more information on subject matter patentability, contact Paul R. Juhasz at +1 713-260-9651.