Federal Circuit Breathes New Life Into § 101 Challenges

11 May 2013 IP Litigation Current Blog

Today, the Federal Circuit issued a fractured decision in CLS Bank v. Alice Corp. (Fed. Cir. 2013) that may breathe new life into challenges to patent validity under 35 U.S.C. § 101. Despite seven different opinions from the en banc Court, none of which garnered a majority, the Court affirmed that the software-oriented patent claims at issue were not directed to patent eligible subject matter. Of note is the fact that the claims at issue included claims directed to: a method or process; a computer-readable-medium; and a computerized system (though the court was evenly split on the issue of whether the system claims were patent eligible). Also of note is the fact that the claims at issue provided a fair amount of detail, unlike claims at issue in some prior § 101 decisions (such as Bilski). Even without a precedential opinion, CLS Bank provides a springboard for § 101, even in situations where arguments may have previously been considered weak.

Despite opening the door a little wider for § 101 challenges, the lack of certainty provided by the Federal Circuit leaves practitioners and clients in the unpleasant position of determining when and if to assert an invalidity challenge under 35 U.S.C. § 101. The lack of clear precedent assures that attempts to challenge patent eligibility will likely be hotly fought in district court and on appeal (i.e. expensive). However, a challenge under § 101 may also present an opportunity for cutting off litigation at it’s early stages. Indeed, in CLS Bank summary judgment was granted prior to claim construction, though the Federal Circuit cautioned that this might not always be appropriate, reiterating the district court’s discretion in managing its docket.

CLS Bank bank might also have immediate implications at the Patent Trial and Appeal Board (PTAB) through petitions for Covered Business Method (CBM) review, where challenges under § 101 are allowed. A § 101 challenge may be particularly appropriate for CBM proceedings considering the likely overlap between concepts considered “abstract ideas” and those intended to fall under CBM’s purview.  Both CLS Bank and Bilski concerned patent claims that were arguably directed to a “financial product or service”, a requirement for filing CBMs that has so far been broadly interpreted by the PTAB.  It will be interesting to see what weight, if any, the PTAB accords the differing analysis in CLS Bank.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services