Supreme Court to Rule on Patentability of Computer Implemented Business Methods

On December 6, 2013, the US Supreme Court agreed to hear an appeal of the Court of Appeals for the Federal Circuit’s en banc decision in CLS Bank v. Alice Corp, No. 2011-1301 (2013).  In CLS Bank, the Federal Circuit held that a business method was not transformed from an unpatentable abstract idea into patentable subject matter merely because the method was implemented as software running on a computer.

The Federal Circuit, which has primary responsibility for interpreting US patent law, has struggled for over a decade to define the standards that district courts should apply to evaluate the patentability of business method patents in particular, and computer programs in general.  In CLS Bank, the court upheld the district court’s finding that all claims of the patent-in-suit, directed to a business method for facilitating financial transactions, were invalid because they were not drawn to patent eligible subject matter.  The court’s ten-member en banc panel, however, released seven different decisions in support of their conclusion—none of which garnered majority support.  Thus, the court provided trial courts with little guidance on this important issue and essentially left the law as fractured as ever.  It is hoped that the Supreme Court will use the CLS Bank appeal to bring much needed clarity to the question when, if ever, business methods and computer software are patentable.