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IP Alert: Federal Circuit Issues Another Decision on Patent Eligibility

September 9, 2013

On September 5, 2013, in Accenture Global Services GmbH et al. v. Guidewire Software, Inc., the Federal Circuit issued another decision on the question of the extent to which computer-based technology can constitute patentable subject matter under U.S. law.

Accenture’s patent describes a method and system for use in the insurance industry. Generally, the patent teaches “[a] computer program . . . for handling insurance-related tasks.” Claims 1–7 of the Accenture patent specified a “system for generating tasks to be performed in an insurance organization,” the system including databases, a “client component,” and a “server component.” Claims 8–22 specified an “automated method for generating tasks to be performed in an insurance organization.” In 2007 Accenture sued Guidewire for patent infringement.

The lawsuit progressed slowly as the U. S. Supreme Court considered another case, Bilski v. Kappos, which also concerned patent subject matter eligibility. After the Supreme Court issued its decision in Bilski, Guidewire moved for summary judgment of patent invalidity on the ground that the Accenture patent claims were not patent-eligible. 

The district court granted Guidewire’s motion, holding that Accenture’s patent was “directed to concepts for organizing data rather than to specific devices or systems, and limiting the claims to the insurance industry does not specify the claims sufficiently to allow for their survival.” The district court further held that none of the claim limitations restrict the claims to a concrete application of the abstract idea.  Accenture appealed only as to claims 1–7, the system claims, and did not appeal the method claims.

On appeal, the Federal Circuit affirmed. The court began by considering Accenture’s appeal of only the method claims. Although method and system claims were not identical in scope, the court held, “Although Accenture appealed the judgment as to all system claims 1–7, the briefing and argument from both parties focused only on system claim 1 and method claim 8, lending support to the conclusion that the eligibility of dependent claims 2–7 depends on the eligibility of claim 1.”  The court then found the system claims to be patent-ineligible because they were not significantly different from the method claims for purposes of the patent eligibility determination: “While it is not always true that related system claims are patent-ineligible because similar method claims are, when they exist in the same patent and are shown to contain insignificant meaningful limitations, the conclusion of ineligibility is inescapable.”

The Federal Circuit also considered whether the system claims independently were eligible for patenting (aside from the status of the method claims). Accenture advanced several arguments that the claims defined patent-eligible subject matter. Accenture argued that the patent not only implemented the general idea of generating tasks for insurance claim processing, but narrows it through its recitation of a combination of several computer components. Accenture further argued that the complexity and detail of the specification demonstrated that the patent is an advance in computer software and not simply a claim to an abstract idea. Additionally, Accenture argued that the Ultramercial v. Hulu decision (discussed in an earlier Fitch Even IP Alert here) supported patent eligibility.

The court rejected all of Accenture’s arguments. Writing for the majority, Judge Lourie first determined that the claims specified “generating tasks [based on] rules . . . to be completed upon the occurrence of an event,” and that this was an “abstract concept.” Judge Lourie then reviewed his own opinion in CLS Bank v. Alice (a case that generated several opinions for the en banc Federal Circuit). Following this opinion, the court conducted a “preemption analysis” to determine whether “additional substantive limitations . . . narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.” Answering this question in the negative, the court explained that “simply implementing an abstract concept on a computer, without meaningful limitations to that concept, does not transform a patent-ineligible claim into a patent-eligible one.” The court further explained that “limiting the application of an abstract idea to one field of use [the insurance industry] does not necessarily guard against preempting all uses of the abstract idea.”

Second, rejecting Accenture’s “complexity” contention, the court held that “[t]he limitations of the system claims of the ’284 patent do not provide sufficient additional features or limit the abstract concept in a meaningful way.” In other words, held the court, “the complexity of the implementing software or the level of detail in the specification does not transform a claim reciting only an abstract concept into a patent-eligible system or method.”

Finally, distinguishing Ultramercial, the court held that the claim at issue in the present case did not contain “significantly more than the underlying abstract concept.” The claims in Ultramercial contained “additional limitations from the abstract idea of advertising as currency,” held the court, including features such as “limiting the transaction to an Internet website, offering free access conditioned on viewing a sponsor message, and only applying to a media product.” The court further observed that the procedural posture in Ultramercial (which had addressed a motion to dismiss, not a grant of summary judgment) was different from the posture in the present case.

In dissent, Judge Rader disagreed with the majority’s approach of the comparing the system claims to the invalid method claims. He stated that this approach was not sanctioned by the Supreme Court, and in any case was otherwise unsound as “requiring litigants to appeal the invalidity of every claim or else risk the potential for estoppel or waiver of other claims.” More broadly, Judge Rader stated that Judge Lourie’s opinion in CLS Bank did not carry the weight of precedent. He opined that the system claims defined statutory subject matter independently of the method claims because the system claims required a specific combination of computer components. He further observed that what the majority had termed an “abstract idea” in Accenture’s claim could be implemented in many other ways without infringing Accenture’s patent.

The Accenture case is yet another Federal Circuit decision that illustrates the difficulty in understanding the Federal Circuit’s current position on statutory subject matter. Notably, in the CLS Bank case, the defendant, Alice Corporation, recently filed a petition for a writ of certiorari before the Supreme Court. Should the Court accept the petition, the resulting decision could affect the law as expressed in the Accenture decision. Fitch Even attorneys are monitoring the progress of the CLS Bank petition, will watch for future developments in the Accenture decision, and will report in a future IP Alert.

For more information on the Accenture case, please contact Fitch Even partner Alison Aubry Richards, the author of this alert.

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