The Last Word – Revisited

As in the past we have so eloquently noted (see The Last Word), the Supreme Court held in its famous Bilski decision that the C.A.F.C.’s “machine-or-transformation test” (affectionately known as MORT by us patent professionals), although “a useful and important clue,” is NOT the sole test for determining the patentability of process claims. Rather than simply informing what other test might apply, the Court endorsed a “broad standard” for determining patent eligibility and then enumerated three “fundamental principles” which were exceptions thereto, namely: laws of nature, physical phenomena, and abstract ideas. “[E]ven if an invention appears to nominally claim subject matter that would be statutorily covered by the Patent Act, it will be denied patent protection if it falls into one of ‘fundamental principles’ exceptions.” Lacking anything more definitive, we look, once again, to see how the district courts are interpreting and applying this Supreme Court “decision” (we use the word “decision” advisedly). (Accenture Global Services GmbH et al. v. Guidewire Software, Inc.)

Accenture alleged infringement of two patents directed to the processing of insurance claims and related matters. One of the patents (the ‘284 patent) claimed a method “for generating tasks to be performed in an insurance organization,” comprising steps such as “transmitting information,” “determining the characteristics of information,” “applying the characteristics of information…to rules” contained in an insurance transaction database, and internally routing “determined tasks to be completed.” The second patent (the 111 patent) provided “methods and systems for the automatic generation of file notes for insurance claims using predefined text.” Guidewire moved for summary judgment that both patents were invalid as directed to nonstatutory subject matter.

The district court had previously ruled that neither of these patents satisfied MORT. In an effort to finally drive a stake through their hearts, Guidewire argued that “all of the claims reflect field of use restrictions or insignificant post-solution activity and, therefore, constitute unpatentable abstract ideas.” Accenture, in response, contended that “the Supreme Court specifically recognized computer software as patent-eligible subject matter” and that “it is clear that the claims are not abstract ideas, but rather specific applications in computer software directed to teaching a human how to build the software, not how to process an insurance claim.”

Having heard these brilliant arguments from both parties, the district court proceeded with its task to “determine whether the claims as a whole convey an unpatentable abstract idea.” Perhaps telegraphing its decision, the Court went on, “the focus of this inquiry is on the extent to which the application of an abstract idea is specific and/or limited, because inventions with specific applications are less likely to be abstract.”

Not surprisingly, the Court found both patents “are directed to abstract and, therefore, unpatentable, methods for generating file notes and tasks to be performed for insurance claims…[they] are directed to concepts for organizing data rather than to specific devices or systems, and limiting the claims to the insurance industry does not specify (sic) the claims sufficiently to allow for their survival.” In particular, the ‘284 patent is abstract because “none of [the above-mentioned claim steps] limit the claim to a concrete application [and the] dependent claims also disclose abstract ideas with insignificant post-solution activity and technological field restrictions.” Similarly, the ‘111 patent merely disclosed “steps that involve taking notes about insurance claims and storing the data. The field of use restriction limiting these claims to the insurance industry is insufficient to provide a concrete basis” for the claims. “Viewing the claim language of the [patents] as a whole confirms the court’s conclusion that the patents contain abstract ideas which are unpatentable…” (emphasis added).

So, folks, there it is. After quoting ad nauseum from the Bilski decision, the district court devoted less than one page of its 13 page decision to explaining how it found support for its previous “conclusion” that the claims were directed to mere “abstract ideas.”

We hope this clarifies the question of patent-eligibility of business methods.

The Lesson To Be Learned: given this level of predictability (none, as far as we can see) we repeat our advice that wise businesspeople settle their disputes rather than taking them to a court.