In the weeks since the Alice Corp. v. CLS Bank Supreme Court decision, we have been watching patents and applications fall left and right due to use of that case's more stringent test regarding patent-eligibility.  This test requires that, for purposes of determining whether claims involve statutory subject matter under 35 U.S.C. § 101, one must apply a two prong analysis.  The first prong is to determine whether the claims are directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea.  If so, the second prong is to determine whether any additional claim elements transform the nature of the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

While not explicitly targeting software and business methods, in reality the Court has made these types of patents more difficult to obtain.  The U.S. district courts, the Federal Circuit, and the U.S. Patent and Trademark Office have been applying the CLS Bank test aggressively.  In the vast majority of cases, the claims under consideration are found to be patent-ineligible.

Consequently, one of the difficulties we have when trying to draft or amend claims so that they withstand scrutiny is that there are very few examples of claims that are patent-eligible under CLS Bank.  All Federal Circuit case law interpreting § 101 prior to June 19 of this year (the date of the CLS Bank decision), is suspect.  Thus, when a post-CLS Bank case that applies the CLS Bank test finds claims patent-eligible, that case is worthy of attention.

U.S. Bancorp v. Solutran, Inc. was a covered business method review before the Office's Patent Trial and Appeal Board.  While this case does not carry the weight of precedent, it does provide a glimpse at what some of the Office's administrative patent judges may be thinking regarding § 101.

U.S. Bancorp petitioned for the review in order to challenge the patentability of claims 1-6 of U.S. Patent No. 8,311,945, owned by Solutran.  As an example, claim 1 of the '945 patent recites:

1.  A method for processing paper checks, comprising:
    a) electronically receiving a data file containing data captured at a merchant's point of purchase, said data including an amount of a transaction associated with MICR information for each paper check, and said data file not including images of said checks;
    b) after step a), crediting an account for the merchant;
    c) after step b), receiving said paper checks and scanning said checks with a digital image scanner thereby creating digital images of said checks and, for each said check, associating said digital image with said check's MICR information; and
    d) comparing by a computer said digital images, with said data in the data file to find matches.

The Board first verified that this patent is ripe for covered business method review, in that the petitioner had been sued for infringement of the patent, the claims for which review had been requested were directed to a financial product or service, and that the challenged patent was not technical in nature.  The last part of this test as applied by the Board is notable.  The Board sought to determine "whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution."  In answering this question in the negative, the Board wrote that the claimed features of "checks, digital image scanners, and computers were known technologies in the prior art before the effective filing date of the '945 patent in 2006," and that "no limitation of claim 1 . . . represents a technological feature that is novel or unobvious over the prior art."  With that threshold test out of the way, the Board initiated the review.

Among other points, U.S. Bancorp contended that "[o]ther than the claimed idea of a non-merchant entity performing check scanning, claim 1 includes nothing but mental process steps, insignificant extra-solution activity, and conventional computer hardware components for performing basic computer  functions."  The Board responded by indicating that "[i]n determining whether a method or process claim recites an abstract idea, we must examine the claim as a whole."  Thus, the Board found U.S. Bancorp's arguments unpersuasive because "they are directed to each method step individually without accounting sufficiently for the claims as a whole."

Instead, when conducting the first prong of the CLS Bank test, the Board found that the claim 1 was directed to "a method of processing paper checks, which is more akin to a physical process than an abstract idea."  Thus, despite claim 1 reciting "some fundamental economic practices . . . such as crediting an account for a merchant," the additional features of "receiving said paper checks and scanning said checks with a digital scanner and comparing by a computer said digital images . . . are not fundamental economic practices, mathematical algorithms, or basic tools of scientific and technological work."

Noting that "application of the Supreme Court's test cannot disembody such recitations from the claim viewed as a whole," the Board held that claim 1 was directed to processing paper checks rather than an abstract idea.  Thus, the Board concluded that U.S. Bancorp "has not demonstrated that it is more likely than not that challenged claims 1-6 are unpatentable under 35 U.S.C. § 101."  (Ultimately, the Board ordered a covered business method review of the claims because it also concluded that the claims were more likely than not obvious over applicant admitted prior art and a secondary reference.)

The procedural stance of this case is unusual.  It was before the Patent Trial and Appeal Board rather than a federal court.  Also, this opinion only considered whether it is more likely than not that the claims would eventually be found to be unpatentable.  Nonetheless, the Board's application of the first prong from CLS Bank is informative, and provides patent holders with a tool than can be used to rebut contentions of patent-ineligibility -- namely, an example of a business method patent that is not directed to an abstract idea.

Since the Board decided that the claims were not directed to an abstract idea, it never reached the issue of whether the claims recite "significantly more."  A case that illustrates how to apply the second prong would be welcome.

U.S. Bancorp v. Solutran, Inc., Case No. CBM2014-00076, 2014 WL 3943913 (PTAB Aug. 7, 2014)