Client Alert Intellectual Property
Pillsbury Winthrop Shaw Pittman LLP www.pillsburylaw.com 1
May 28, 2013
Federal Circuit’s Split Decision on Software
Patents in CLS Bank Satisfied No One and
Confused All
By Evan Finkel
On Friday, May 10, 2013, the Federal Circuit issued an opinion that was
supposed to clarify the test for determining whether an invention implemented
using a computer is for an “abstract idea” that is ineligible for patent
protection. Instead, the Court did the exact opposite. Let the games begin.
I. The Windup
Section 101 of the patent statute lists the categories of subject matter eligible for patent protection as
including “any new and useful process, machine, manufacture, or composition of matter, or any new and
useful improvement thereof.”1 The Supreme Court long ago indicated that the four classes of statutory
subject matter listed “include[s] anything under the sun that is made by man” with three extremely limited
exceptions.2 The exceptions are “laws of nature, physical phenomena, and abstract ideas.”3 To be entitled
to a patent, the applicant must still demonstrate that the invention meets the other requirements of the
patent statute, such as being novel and unobvious.4 Thus, Section 101 less the three judicially-created
exceptions defines whether an invention is eligible for patent (i.e., “patent-eligibility” or “patent-eligible
subject matter”), while other statutory sections define whether the invention represents a sufficient
contribution to the store of knowledge to be worthy of receiving the legal monopoly that a patent affords
(i.e., “patentability”).
Now, a software program running on a computer is a “machine,” and a method of doing business whether
implemented in software or on paper, is a “process,” as required by Section 101. But the Federal Circuit
was tasked with responsibility for promulgating a test for determining whether a software program or
business method is nevertheless a patent-ineligible “abstract idea.” The Federal Circuit embraced that
responsibility with gusto, defining a bright-line standard known as the Machine-or-Transformation (“MOT”)
test. An en banc panel of the court held that “[a] claimed process is surely patent-eligible under §101 if: (1)
2 Diamond v. Chakrabarty, 447 U. S. 303, 309 (1980) (quoting 182 S.Rep. No.1979, 82d Cong., 2d Sess., 5 (1952) and
H.R.Rep. No.1923, 82d Cong., 2d Sess., 6 (1952)).
3 Chakrabarty, at 309.
4 See 35 U.S.C. §§ 102 and 103.
Client Alert
Intellectual Property
