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Fed Cir Says Business Methods Patentable, Judge Prost Dissents

By Tanya Roth, Esq. on July 12, 2012 | Last updated on March 21, 2019

The Federal Circuit Court of Appeals ruled this week that a business method was patentable.

Alice Corporation, a company partly owned by National Australia Bank Ltd., devised four methods which essentially reduced the risks involved with exchanging financial obligations over a designated computerized system.

Alice Corporation was sued by a company called CLS Bank International, which argued that the methods were not patentable, since they were abstract ideas, reports Reuters.

Under Section 101 of the Patent Act, "laws of nature, natural phenomena and abstract ideas" are not patentable.

We've discussed something very similar to this when we wrote about the Prometheus case in March. But the Prometheus case dealt with companies trying to patent their observations on natural phenomenon, whereas the current case deals with the concept of patenting an "abstract idea."

The "abstract idea" concept has been addressed by SCOTUS in the past. In Bilski v. Kappos, the Supreme Court held that a business method guarding against investment risk was not patentable.

But what makes an idea "abstract"? After all, ideas, by nature, are abstract, to some degree or another.

That's what Judge Richard Linn wrote, in the Federal Circuit's opinion. Once an idea attaches itself to a specific application, then we have a different story, though.

In her dissent, Judge Sharon Prost accused the majority of creating an "entirely new framework" that gives courts broad discretion over Section 101 patent eligibility claims. She further wrote that the patent claims in the case were "abstract ideas repackaged as methods and systems." We'll have more on her dissent in our next blog post.

In light of the dissent and the analogy to the Prometheus case, is it possible that we might see SCOTUS grappling with the question in the near future?

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