Post-CLS case on 35 U.S.C. 101, Accenture Global Services, GMBH and Accenture LLP v. Guidewire Software, Inc., Federal Circuit 2013

Accenture Global Services, GmbH and Accenture, LLP (“Accenture”) appealed from the grant of summary judgment by the United States District Court for the District of Delaware holding that all claims of U.S. Patent 7,013,284 are invalid under 35 U.S.C. § 101.

The ‘284 software patent describes a computer program for handling insurance-related tasks.

The software patent discloses various software components, including a “data component that stores, retrieves and manipulates data” and a client component that “transmits and receives data to/from the data component.” The client component also includes a business component that “serves as a data cache and includes logic for manipulating the data.”  There is also a controller component to handle program events and an adapter component to interface with a data repository.

The specification contains detailed descriptions of the various software components, including many of the functions those components utilize and how those components interact.

Claim 1 is a claim to a software system for generating tasks to be performed in an insurance organization and recites:
       A system for generating tasks to be performed in an insurance organization, the system comprising:
       an insurance transaction database for storing information related to an insurance transaction, the insurance transaction database comprising a claim folder containing the information related to the insurance transaction decomposed into a plurality of levels from the group comprising a policy level, a claim level, a participant level and a line level, wherein the plurality of levels reflects a policy, the information related to the insurance transaction, claimants and an insured person in a structured format;
       a task library database for storing rules for determining tasks to be completed upon an occurrence of an event;
       a client component in communication with the insurance transaction database configured for providing information relating to the insurance transaction, said client component enabling access by an assigned claim handler to a plurality of tasks that achieve an insurance related goal upon completion; and
       a server component in communication with the client component, the transaction database and the task library database, the server component including an event processor, a task engine and a task assistant;
       wherein the event processor is triggered by application events associated with a change in the information, and sends an event trigger to the task engine; wherein in response to the event trigger, the task engine identifies rules in the task library database associated with the event and applies the information to the identified rules to determine the tasks to be completed, and populates on a task assistant the determined tasks to be completed, wherein the task assistant transmits the determined tasks to the client component.

 Claim 8 claims a software method for generating tasks to be performed in an insurance organization and recites:
       An automated method for generating tasks to be performed in an insurance organization, the method comprising: 

       transmitting information related to an insurance transaction;
       determining characteristics of the information related to the insurance transaction; 

       applying the characteristics of the information related to the insurance transaction to rules to determine a task to be completed, wherein an event processor interacts with an insurance transaction database containing information related to an insurance transaction decomposed into a plurality of levels from the group comprising a policy level, a claim level, a participant level and a line level, wherein the plurality of levels reflects a policy, the information related to the insurance transaction, claimants and an insured person in a structured format; 

       transmitting the determined task to a task assistant accessible by an assigned claim handler, wherein said client component displays the determined task; 

       allowing an authorized user to edit and perform the determined task and to update the information related to the insurance transaction in accordance with the determined task;

       storing the updated information related to the insurance transaction; and

       generating a historical record of the completed task.

The Federal Circuit found many similarities between the apparatus claim and method claim and noted that both claim 1 and claim 8 disclose aspects of “generating tasks to be performed in an insurance organization.”  They also noted that claim 1 and claim 8 further include many of the same software components.  

The Federal Circuit stated that they recently evaluated 35 U.S.C. § 101 and its application to computer software in CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013) (en banc). The plurality opinion in CLS Bank identified a two-step process, derived from the Supreme Court’s decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc., ___ U.S. ___, 132 S. Ct. 1289 (2012), for analyzing patent eligibility under § 101. First, the court must identify “whether the claimed invention fits within one of the four statutory classes set out in § 101.”  Second, one must assess whether any of the judicially recognized exceptions to subject-matter eligibility apply, including whether the claims are to patent-ineligible abstract ideas.

In the case of abstractness of a software patent, the court must determine whether the claim poses “any risk of preempting an abstract idea.”  To do so the court must first “identify and define whatever fundamental concept appears wrapped up in the claim.”  Then, proceeding with the preemption analysis, the balance of the claim is evaluated 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.”

The Federal Circuit then stated that although CLS Bank issued as a plurality opinion, in that case a majority of the court held that system claims that closely track method claims and are grounded by the same meaningful limitations will generally rise and fall together.  

The district court in this case held that the method claims of the ’284 software patent are invalid under § 101. That judgment was not appealed by Accenture.  That may have been a big mistake.

The Federal Circuit stated that because the ’284 software patent’s method claims were found to be patent ineligible, they should first compare the substantive limitations of the method claim and the system claim to see if the system claim offers a “meaningful limitation” to the abstract method claim, which has already been adjudicated to be patent-ineligible.  CLS Bank, 717 F.3d at 1291.

Under this analysis, the court compares the two claims to determine what limitations overlap, then identify the system claim’s additional
limitations. Essentially, the court must determine whether the system claim offers meaningful limitations “beyond generally linking ‘the use of the [method] to a particular technological environment.’” Id. (quoting Bilski, 130 S. Ct. at 3230).  

The court went on to say that the ’284 software patent’s system claim 1 includes virtually the same limitations and many of the same software components as the patent-ineligible method claims. Both claims are for “generating tasks to be performed in an insurance organization.”

Accenture only points to system claim 1’s inclusion of an insurance claim folder, a task library database, a server component, and a task engine in attempting to show that the system claim is meaningfully different from the ’284 patent’s method claims. However, according to the Federal Circuit, these software components are all present in the method claims, albeit without a specific reference to those components by name.

The Federal Circuit stated that even the specification of the ’284 patent makes little distinction between the system and method claims.

According to the Federal Circuit, because the system claim and method claim contain only “minor differences in terminology [but] require performance of the same basic process,” they should rise or fall together.

Accenture reasonably argued that system claim 1 of the software patent remains patent-eligible even after CLS Bank. It contended that the claim is patent-eligible because the ’284 patent implements the general idea of generating tasks for insurance claim processing, but narrows it through its recitation of a combination of computer components including an insurance transaction database, a task library database, a client component, and a server component, which includes an event processor, a task engine, and a task assistant. Accenture further argued that the complexity and detail of the specification demonstrate that the patent is an advance in computer software and not simply a claim to an abstract idea. Additionally, Accenture pointed to the recently-issued decision in Ultramercial as support for the patent-eligibility of system claim 1.

Guidewire responded that system claim 1 of the software patent sets forth the same steps and recites all the same elements as method claim 8 and requires no specific hardware or any particular algorithm.

The Federal Circuit finally concluded that the system claims of the ’284 software patent were patent-ineligible both because Accenture was unable to point to any substantial limitations that separate them from the similar, patent-ineligible method claim and
because, under the two-part test of CLS Bank, the system claim does not, on its own, provide substantial limitations to the claim’s patent-ineligible abstract idea.  

Judge Rader dissented.  I agree with his dissent.  He noted that prior to granting en banc review in CLS Bank, the Federal Circuit commented: “no one understands what makes an idea abstract.”  After CLS Bank, nothing has changed.  Opinions spend page after page revisiting cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter.

Indeed, deciding what makes an idea “abstract” is “reminiscent of the oenologists trying to describe a new wine.”

I couldn’t agree more.

Post-CLS case on Software Patents, Ultramercial, Inc. v. Hulu, LLC, Federal Circuit 2013

Ultramercial sued Hulu, YouTube, and WildTangent for infringement of U.S. Patent No. 7,346,545.  The software patent generally relates to method for inserting ads in free online videos so that viewers must watch them before they can proceed.  Hulu and YouTube were eventually dismissed from the case.  WildTangent filed a
12(b)(6) motion to dismiss for failure to state a claim.  The District Court for the Central District of California held that the patent does not
claim patent-eligible subject matter.  On appeal, the Federal Circuit
reversed and remanded.  However, that decision was vacated by the
Supreme Court.

Claim 1 recites:
        A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
        a first step of receiving, from a content provider, media
products that are covered by intellectual property rights protection and
are available for purchase, wherein each said media product being
comprised of at least one of text data, music data, and video data;
        a second step of selecting a sponsor message to be associated
with the media product, said sponsor message being selected from a
plurality of sponsor messages, said second step including accessing an
activity log to verify that the total number of times which the sponsor
message has been previously presented is less than the number of
transaction cycles contracted by the sponsor of the sponsor message;
        a third step of providing the media product for sale at an Internet website;
        a fourth step of restricting general public access to said media product;
        a fifth step of offering to a consumer access to the media
product without charge to the consumer on the precondition that the
consumer views the sponsor message;
        a sixth step of receiving from the consumer a request to view
the sponsor message, wherein the consumer submits said request in
response to being offered access to the media product;
        a seventh step of, in response to receiving the request from
the consumer, facilitating the display of a sponsor message to the
consumer;
        an eighth step of, if the sponsor message is not an
interactive message, allowing said consumer access to said media product
after said step of facilitating the display of said sponsor message;
        a ninth step of, if the sponsor message is an interactive
message, presenting at least one query to the consumer and allowing said
consumer access to said media product after receiving a response to
said at least one query;
        a tenth step of recording the transaction event to the
activity log, said tenth step including updating the total number of
times the sponsor message has been presented;
        and
        an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

Judge Rader noted first that it will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter. This is so because every issued
patent is presumed to have been issued properly, absent “clear and convincing” evidence to the contrary.  Second, the analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues.   Third, and in part because of the factual issues involved,
claim construction normally will be required.  Fourth, the question of eligible subject matter
must be determined on a claim-by-claim basis.

The court then noted that 35 U.S.C. § 101 sets forth the categories of subject matter that are eligible for patent protection:
“[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” Underscoring its breadth, § 101 both uses expansive categories and modifies them with the word “any.” In Bilski, the Supreme Court emphasized that “[i]n choosing such expansive terms modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope.” 130 S. Ct. at 3225 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)).

The Supreme Court has on occasion recognized narrow judicial exceptions to the 1952 Act’s deliberately broadened eligibility provisions. In line with the broadly permissive nature of § 101’s subject matter eligibility principles and the structure of the Patent Act, case law has recognized only three narrow categories of subject matter outside the eligibility bounds of § 101—laws of
nature, physical phenomena, and abstract ideas. Bilski, 130 S. Ct. at 3225. The Court’s motivation for recognizing exceptions to this broad statutory grant was its desire to prevent the “monopolization” of the “basic tools of scientific and technological work,” which “might tend to impede innovation more than it would tend to promote it.” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct.
1289, 1293 (2012) (“Prometheus”)

Though recognizing these exceptions, the Court has also recognized that these implied exceptions are in obvious tension with the plain language of the statute, its history, and its purpose.  Thus, this court must not read § 101 so restrictively as to exclude “unanticipated inventions” because the most
beneficial inventions are “often unforeseeable.”

In the eligibility analysis as well, the presumption of proper issuance applies to a granted software patent.

Defining “abstractness” has presented difficult problems, particularly for the § 101 “process” category. Clearly, a process need not use a computer, or some machine, in order to avoid “abstractness.” In this regard, the Supreme Court recently examined the statute and found that the ordinary, contemporary, common meaning of “method” may include even methods of doing business.
See Bilski, 130 S. Ct. at 3228. Accordingly, the Supreme Court refused to deem business methods ineligible for patent protection and cautioned against “read[ing] into the patent laws limitations and conditions which the legislature has not expressed.” Id. at 3226 (quoting Diamond v. Diehr, 450 U.S. 175, 182 (1981)).

In an effort to grapple with this non-statutory “abstractness” exception to “processes,” the dictionary provides some help.  Judge Rader referred to Merriam-Webster’s Collegiate
Dictionary 5 (11th ed. 2003) (defining abstract as “disassociated from any specific instance . . . expressing a quality apart from an object ”). An abstract idea is one that has no reference to material objects or specific examples—i.e., it is not concrete.

He noted that members of both the Supreme Court and the Federal Circuit have recognized the difficulty of providing a precise formula or definition for the abstract concept of abstractness.

A software patent claim can embrace an abstract idea and be patentable.  See Prometheus, 132 S. Ct. at 1294 (explaining that the fact that a claim uses a basic tool does not mean it is not eligible for patenting). Instead, a claim is not patent eligible only if, instead of claiming an application of an abstract idea, the claim is instead to the abstract idea itself.

In determining on which side of the line the software patent claim falls, the court must focus on the claim as a whole.

The Court has long-recognized that any software patent claim can be stripped down, simplified, generalized, or paraphrased to remove all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed. A court cannot go hunting for abstractions by
ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims.
Instead, the relevant inquiry is whether a claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea. See Prometheus, 132 S. Ct. at 1297.

Judge Rader then considered an old example. The claims in O’Reilly v. Morse, 56 U.S. (15 How.) 62 (1854), and a case described therein, illustrate the distinction between a patent ineligible abstract idea and a practical application of an idea. The “difficulty” in Morse arose with the claim in which Morse did not propose to limit himself to the specific machinery or parts of machinery described in the specification and claims; the essence of him invention being the use of the motive power of the electric or galvanic current however developed for marking or printing intelligible characters, signs, or letters, at any distances. In considering Morse’s claim, the Supreme Court referred to an earlier English case that distinguished ineligible claims to a “principle” from claims “applying” that principle.

The Supreme Court repeatedly has cautioned against conflating the analysis of the conditions of patentability in the Patent Act with inquiries into patent eligibility. See Diehr, 450 U.S. at 190.

When assessing computer implemented claims, while the mere reference to a general purpose computer will not save a method claim from being deemed too abstract to be patent eligible, the fact
that a claim is limited by a tie to a computer is an important indication of patent eligibility. See Bilski, 130 S. Ct. at 3227. This tie to a machine moves it farther away from a claim to the abstract idea itself. Moreover, that same tie makes it less likely that the claims will pre-empt all practical applications of the idea.

This inquiry focuses on whether the claims tie the otherwise abstract idea to a specific way of doing something with a computer, or a specific computer for doing something; if so, they likely will be patent eligible. On the other hand, software patent claims directed to nothing more than the idea of doing that thing on a computer are likely to face larger problems. While no particular type of limitation is necessary, meaningful limitations may include the computer being part of the solution, being integral to the performance of the method, or containing an improvement in computer technology. See SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1332-33 (Fed. Cir. 2010) (noting that “a machine,” a GPS receiver, was “integral to each of the claims at issue” and “place[d] a meaningful limit on
the scope of the claims”). A special purpose computer, i.e., a new machine, specially designed to implement a process may be sufficient. See Alappat, 33 F.3d at 1544.

In this case, the defending parties proceed on the assumption that the mere idea that advertising can be used as a form of currency is abstract, just as the vague, unapplied concept of hedging
proved patent-ineligible in Bilski.

The ’545 patent seeks to remedy problems with prior art banner advertising over the Internet, such as declining click-through rates, by introducing a method of product distribution that forces consumers to view and possibly even interact with advertisements before permitting access to the desired media product.

By its terms, the claimed invention invokes computers and applications of computer technology.
Specifically, the ’545 patent claims a particular internet and computer-based method for monetizing copyrighted products, consisting of the following steps: (1) receiving media products from a copyright holder, (2) selecting an advertisement to be associated with each media product, (3) providing said media products for sale on an Internet website, (4) restricting general public access to the media products, (5) offering free access to said media products on the condition that the consumer view the advertising, (6) receiving a request from a consumer to view the advertising, (7) facilitating the display of advertising and any required interaction with the advertising, (8) allowing the consumer access to the associated media product after such display and interaction, if any, (9) recording this transaction in an activity log, and (10) receiving payment from the advertiser. ’545 patent col. 8, ll. 5-48. Judge Rader noted that his court does not need the record of a formal claim construction to see that many of these steps require intricate and complex computer programming.

Even at this general level, it wrenches meaning from the word to label the claimed invention “abstract.” The claim does not cover the use of advertising as currency disassociated with any specific application of that activity. It was error for the district court to strip away these limitations and instead imagine some “core” of the invention.

Further, and even without formal claim construction, it is clear that several steps plainly require that the method be performed through computers, on the internet, and in a cyber-market environment. One clear example is the third step, “providing said media products for sale on
an Internet website.” Col. 8, ll. 20-21. And, of course, if the products are offered for sale on the Internet, they must be “restricted”—step four—by complex computer programming as well.

In addition, Figure 1, alone, demonstrates that the claim is not to some disembodied abstract idea but is instead a specific application of a method implemented by several computer systems, operating in tandem, over a communications network.  Almost all of the steps in this process, as explained in the flow chart of Figure 2, are tied to computer implementation.

Viewing the subject matter as a whole, the invention involves an extensive computer interface. Unlike Morse, the claims are not made without regard to a particular process. Likewise, it does not say “sell advertising using a computer,” and so there is no risk of preempting all forms of advertising, let alone advertising on the Internet.

Further, the record at this stage shows no evidence that the recited steps are all token pre- or post-solution steps.

Finally, the software patent claim appears far from over generalized, with eleven separate and specific steps with many limitations and sub-steps in each category. The district court improperly made a subjective evaluation that these limitations did not meaningfully limit the “abstract idea at the
core” of the claims.

Having said that, the Federal Circuit refused to define the level of programming complexity required before a computer implemented method can be patent-eligible. Nor did the court hold that use of an Internet website to practice such a method is either necessary or sufficient in every case to satisfy § 101. They simply held the claims in this case to be patent-eligible, in this posture, in part because
of these factors.

CLS Bank v. Alice Corp., Federal Circuit 2013

The Federal Circuit reviewed an appeal by Alice Corp. of a district court (U.S. District Court for District of Columbia) holding that Alice’s asserted
method claims, computer readable media claims, and systems claims were not directed to eligible subject matter under 35 U.S.C. §101.

The ten-member en banc panel released seven different decisions. None of the opinions garnered majority support. Seven of the ten judges agreed that the method and computer-readable medium claims lack subject matter eligibility. Eight of the ten concluded that the software patent claims should rise and fall together regardless of their claim type.

The software patents concern “the management of risk relating to specified, yet unknown, future events.” In particular, the patents relate to a computerized trading platform used for conducting
financial transactions in which a third party settles obligations between a first and a second party so as to eliminate “counter party” or “settlement” risk. Settlement risk refers to the risk to each party in an exchange that only one of the two
parties will actually pay its obligation, leaving the paying party without its principal or the benefit of the counter-party’s performance. Alice’s patents address that risk by
relying on a trusted third party to ensure the exchange of either both parties’ obligations or neither obligation. For example, when two parties agree to perform a
trade, in certain contexts there may be a delay between the time that the parties enter
a contractual agreement obligating themselves to the trade and the time of settlement when the agreed trade is actually executed. Ordinarily, the parties would consummate the trade by paying or exchanging their mutual obligations after the intervening period, but in some cases one party might become unable to pay during that time and fail to notify the other
before settlement. As disclosed in Alice’s patents, a trusted third party can be used to verify each party’s ability to perform before actually exchanging either of the parties’ agreed-upon obligations.

The claims before the court recited methods of exchanging obligations
between parties, data processing systems, and computer-
readable media containing a program code for directing
an exchange of obligations.

A representative method claim is as follows:
          33. A method of exchanging obligations as between parties, each party holding a credit record
and a debit record with an exchange institution,
the credit records and debit records for exchange
of predetermined obligations, the method comprising the steps of:
          (a) creating a shadow credit record and a shadow
debit record for each stakeholder party to be
held independently by a supervisory institution from the exchange institutions;
          (b) obtaining from each exchange institution a start-of-day balance for each shadow credit
record and shadow debit record;
          (c) for every transaction resulting in an exchange
obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only
these transactions that do not result in the
value of the shadow debit record being less
than the value of the shadow credit record at
any time, each said adjustment taking place
in chronological order; and
          (d) at the end-of-day, the supervisory institution
instructing ones of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties
in accordance with the adjustments of the said
permitted transactions, the credits and debits
being irrevocable, time invariant obligations
placed on the exchange institutions.

A representative apparatus claim is as follows:
          1. A data processing system to enable the exchange of
an obligation between parties, the system comprising:
          a data storage unit
having stored therein information about a shadow credit record and
shadow debit record for a party, independent
from a credit record and debit record maintained by an exchange institution; and
          a computer, coupled to said data storage unit, that
is configured to (a) receive a transaction;
(b)
electronically adjust said shadow credit
record and/or said shadow debit record in order to effect an exchange obligation arising
from said trans
action, allowing only those
transactions that do not result in a value of
said shadow debit record being less than a
value of said shadow credit record; and
(c)
generate an instruction to said exchange
institution at the end of a period of time to adjust said credit record and/or said debit record
in accordance with the adjustment of said
shadow credit record and/or said shadow debit
record, wherein said instruction being an irrevocable, time invariant obligation placed on
said exchange institution.

The district court granted summary judgment in favor of CLS, holding each of the asserted claims of Alice’s software patents invalid under §101.

The district court concluded that Alice’s method claims “are directed to an abstract idea of employing an intermediary to facilitate simultaneous exchange of obligations in order to minimize risk.”

Further, the district court held the asserted system claims similarly ineligible, as those claims “would preempt the use of the abstract concept of employing a neutral intermediary to facilitate simultaneous exchange of obligations in order to minimize risk on any computer, which is, as a practical matter, how these processes are likely to be
applied.”

The asserted media claims failed on the same ground as “directed to the same abstract concept
despite the fact they nominally recite a different category of invention.” The invalidation of the system claims and media claims are disconcerting. One would think that systems and media pass the “machine or transformation” test that was accepted by the Supreme Court as an indication of patent eligibility.

The leading five-member opinion written by Judge Lourie noted that the patent statute sets forth four broadly stated categories of patent-eligible subject matter: processes, machines,
manufactures, and compositions of matter. As the Supreme Court has explained, Congress intended that the statutory categories would be broad and inclusive to best serve the patent system’s constitutional objective of encouraging innovation.
See Diamond v. Chakrabarty, 447 U.S. 303, 308-09 (1980).

While the categories of patent-eligible subject matter recited in §101 are broad, their scope is limited by three important judicially created exceptions.
“[L]aws of nature, natural phenomena, and abstract ideas” are excluded from patent eligibility,
because such fundamental discoveries represent “the basic tools of
scientific and technological work,” Gottschalk v. Benson,
409 U.S. 63, 67 (1972). Thus, even inventions that fit within one or more of the statutory categories are not patent eligible if drawn to a law of nature, a natural phenomenon, or an abstract idea. The underlying concern is that patents covering such elemental concepts would
reach too far and claim too much, on balance obstructing rather than catalyzing innovation. But danger also lies in applying the judicial exceptions too aggressively because “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.”
Mayo Collaborative Servs. v. Prometheus
Labs., Inc., 132 S. Ct. 1289, 1293 (2012). Taken too far, the exceptions could swallow patent law entirely.

The opinion continued on to say that, accordingly, the basic steps in a patent-eligibility
analysis can be summarized as follows. We must first ask whether the claimed invention is a process, machine, manufacture, or composition of matter. If not, the claim is ineligible under §101. If the invention falls within one of the statutory categories, we must then determine
whether any of the three judicial exceptions nonetheless bars such a claim is the claim drawn to a patent ineligible law of nature, natural phenomenon, or abstract
idea? If so, the claim is not patent eligible. Only claims that pass both inquiries satisfy §101. While simple enough to state, the patent-eligibility test has proven quite difficult to apply.

The opinion discussed several Supreme Court cases and noted that several common themes that run through the Supreme Court’s decisions that should frame the analysis in this and other §101 cases.

First and foremost is an abiding concern that patents
should not be allowed to preempt the fundamental tools of
discovery.

Next, the cases repeatedly caution against overly formalistic approaches to subject-matter eligibility that invite manipulation by patent applicants such as
claim drafting strategies that attempt to circumvent the
basic exceptions to §101 using, for example, highly stylized language, hollow field-of-use limitations, or the recitation of token post-solution activity should not be
credited.

Finally, the cases urge a flexible, claim-by-claim approach to subject-matter eligibility that avoids rigid line drawing. Bright-line rules may be simple to apply, but they are often impractical and counterproductive when applied to §101. Such rules risk becoming outdated in
the face of continual advances in technology.

In this software patent, claim 33 plainly recites a process. The issue presented then becomes whether that process amounts to no more than a patent-ineligible abstract idea. As described,
the first step in that analysis requires identifying the
abstract idea represented in the claim. The methods
claimed here draw on the abstract idea of reducing settlement risk by effecting trades through a third-party intermediary (here, the supervisory institution) empowered to verify that both parties can fulfill their obligations before allowing the exchange—i.e., a form of escrow. CLS describes that concept as “fundamental and ancient,”
but
the latter is not determinative of the question of abstractness. Even venerable concepts, such as risk hedging in
commodity transactions, were once unfamiliar, just like the concepts inventors are
unlocking at the leading edges of technology today. But
whether long in use or just recognized, abstract ideas
remain abstract. The concept of reducing settlement risk
by facilitating a trade through third-party intermediation
is an abstract idea because it is a “disembodied” concept, a basic building block of human ingenuity, untethered from any real-world application. Standing alone,
that abstract idea is not patent-eligible subject matter.

The analysis therefore turns to whether the balance of
the claim of the software patent adds “significantly more.” Apart from the idea
of third-party intermediation, the claim’s substantive
limitations require creating shadow records, using a
computer to adjust and maintain those shadow records,
and reconciling shadow records and corresponding exchange institution accounts through end-of-day transactions. None of those limitations adds anything of
substance to the claim.

The opinion states that the requirement for computer implementation
could scarcely be introduced with less specificity; the
claim lacks
any
express language to define the computer’s
participation. In a claimed method comprising an abstract idea, generic computer automation of one or more
steps evinces little human contribution. There is no
specific or limiting recitation of essential, or improved computer technology, and no reason to view the computer limitation as anything but “insignificant post-solution activity” relative to the abstract idea.
Furthermore, simply appending generic computer functionality to lend speed or efficiency to the performance of an otherwise abstract
concept does not meaningfully limit claim scope for purposes of patent eligibility.  That is particularly apparent in this case. Because of the efficiency and
ubiquity of computers, essentially all practical, real-world
applications of the abstract idea implicated here would
rely, at some level, on basic computer functions
—
for
example, to quickly and reliably calculate balances or
exchange data among financial institutions. At its most
basic, a computer is just a calculator capable of performing mental steps faster than a human could. Unless the
claims require a computer to perform operations that are
not merely accelerated calculations, a computer does not
itself confer patent eligibility. In short, the requirement
for computer participation in these claims fails to supply
an “inventive concept” that represents a nontrivial, non-conventional human contribution or materially narrows
the claims relative to the abstract idea they embrace.

Considering the computer readable storage medium claims of the software patent, the opinion noted that although the claim’s preamble appears to invoke a physical object, the claim term “computer readable storage
medium” is stated in broad and functional terms
—
incidental to the claim
—
and every substantive limitation
presented in the body of the claim pertains to the method steps of the
program code “embodied in the medium.” Therefore,
the claim is not “truly drawn to a specific computer readable medium, rather than to the underlying method” of
reducing settlement risk using a third
–
party intermediary. Despite their
Beauregard
format, Alice’s “computer readable medium claims” are thus
equivalent to the methods they recite for §
101 purposes.

Considering the software patent’s apparatus claims, the opinion states that the representative apparatus claim recites a computerized system configured to carry out a series of steps that mirror Alice’s
method claims
—
maintaining shadow records, allowing
only those transactions supported by adequate
value in
the shadow records, adjusting the shadow records pursuant to such transactions, and later instructing exchange institutions to execute the allowed transactions. Indeed,
Alice’s method and system claims use similar and often
identical language to
describe those actions. The
system claims are different, however, in that they also
recite tangible devices as system components, including at
least “a computer” and “a data storage unit.” Other
claims specify additional components, such as a “first
party device” and a “communications controller.”

Similar to the computer
readable medium claims, the system claims are formally
drawn to physical objects and therefore raise a question
whether they deserve to be evaluated differently under
the abstract ideas exception from the accompanying
method claims discussed above. Careful analysis shows
that they do not.
The computer-based limitations recited in the
system
claims here cannot support any meaningful distinction
from the computer-based limitations that failed to supply
an “inventive concept” to the related method claims.

The
shadow record and transaction limitations in Alice’s
method claims require “a computer,” evidently capable of calculation, storage,
and data exchange. The system claims are little different.
They set forth the same steps for performing third-party
intermediation and provide for computer implementation
at an incrementally reduced, though still striking level of
generality. Instead of wholly implied computer limitations, the system claims recite a handful of computer
components in generic, functional terms that would
encompass any device capable of performing the same
ubiquitous calculation, storage, and connectivity functions
required by the method claims. Though the
system claims associate certain computer components
with some of the method steps, none of the recited hardware offers a meaningful limitation beyond generally
linking “the use of the [method] to a particular technological environment,” that is, implementation via computers.

For all practical purposes,
every
general-purpose computer will include “a computer,” “a data
storage unit,” and “a communications controller” that
would be capable of performing the same generalized
functions required of the claimed systems to carry out the
otherwise abstract methods recited therein.

Therefore, as with the asserted method claims, such
limitations are not actually limiting in the sense required
under §
101; they provide no significant “inventive concept.” The system claims are instead akin to stating the
abstract idea of third
–
party
intermediation and adding
the words: “apply it” on a computer. That is not sufficient for patent eligibility, and
the system claims before us fail to define patent
–
eligible
subject matter under §
101, just as do the method and
computer-readable medium claims.

The opinion notes that one of the separate opinions (one with which Malhotra Law Firm, PLLC agrees) in this case takes aim at this opinion, asserting that the system claims here are simply claims to a
patent-eligible machine, a tangible item one can put
on
one’s desk.   Machines are unquestionably eligible for patenting, states the opinion, although the system claims
here clearly track the method claims that the separate
opinion concedes are not patent eligible.
That conclusion is surely correct as an abstract proposition. A particular computer system, composed of wires,
plastic, and silicon, is no doubt a tangible machine. But
that is not the question. The question we must consider is
whether a
patent claim
that ostensibly describes such a
system on its
face represents something more than an
abstract idea in legal substance.  Claims to computers
were, and still are, eligible for patent. No question should
have arisen concerning the eligibility of claims to basic
computer hardware under §
101 when such devices were
first invented. But we are living and judging now
(or at
least as of the patents’ priority dates), and have before us
not the patent eligibility of specific types of computers or
computer components, but computers that
have
routinely
been
adapted by software consisting of abstract ideas, and
claimed as such, to do all sorts of tasks that formerly were
performed by humans. And the Supreme Court has told
us that, while avoiding confusion between §
101 and
§§
102 and 103, merely adding existing computer technology to abstract ideas
—
mental steps
—
does not as a matter
of substance convert an abstract idea into a machine.

Malhotra Law Firm, PLLC (patentsusa.com) takes the position that apparatus claims reciting computer components clearly pass the machine-or-transformation test.

That is what we face when we have a series of claims
to abstract methods and computers fitted to carry out
those methods. We are not here faced with a computer
per
se
. Such are surely patent
–
eligible machines. We are
faced with abstract methods coupled with computers
adapted to perform those methods. And that is the fallacy
of relying on
Alappat
, as the concurrence in part does.
Not only has the world of technology changed, but the
legal world has changed. The Supreme Court has spoken
since
Alappat
on the question of patent eligibility, and we
must take note of that change. Abstract methods do not become patent-eligible machines
by being clothed in
computer language.

In view of this decision, Malhotra Law Firm, PLLC recommends reciting hardware as possible in patent claims, and integrating that hardware into the software method as much as possible.  There has been much lobbying against patenting of financial methods so it is possible that other software methods will be received more favorably.  This decision seems to be contrary to the machine-or-transformation test accepted by the Supreme Court in Bilski as one possible test, at least in my opinion.  Perhaps the Supreme Court will shed more light on the matter some day.  Until then, we have muddy guidance from our Federal Circuit.  They caution against bright line tests and with this decision have certainly not provided any bright lines.  After 20 years we still do not have any clear guidance on what sort of software should be patent-eligible.

Post-Bilski case on Beauregard claims, CyberSource v. Retail Decisions, Federal Circuit 2011 (Software Patents)

The Federal Circuit reviewed an appeal by CyberSource Corporation from a decision of the District Court for the Northern District of California. The district court had granted summary judgment of invalidity of claims 2 and 3 of U.S. Patent No. 6,029,154 (“’154 patent”) under 35 U.S.C. § 101 for failure to recite patent-eligible subject matter. The patent relates to a method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet.

The Federal Circuit refused to hold that all Beauregard claims are necessarily statutory. Instead, they treated a Beauregard claims as a process claim and then applied the machine-or-transformation test.

Claim 3, after reexamination, reads:

3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:

a) obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;

b) constructing a map of credit card numbers based upon the other transactions and;

c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.

Claim 2, after reexamination, is a Beauregard claim and reads:

2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:

a) obtaining credit card information relating to the transactions from the consumer; and

b) verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent,

wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent,

wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;

[a] obtaining information about other transactions that have utilized an

Internet address that is identified with the credit card transaction;

[b] constructing a map of credit card numbers based upon the other transactions; and

[c] utilizing the map of credit card numbers to determine if the credit card transaction is valid.

The Federal Circuit first considered claim 3. The Federal circuit noted that CyberSource acknowledged that the “Internet address” recited in step (a) of claim 3 “may be, for example, an Internet protocol (IP) address or an e-mail address for the particular credit card transaction.” The Federal Circuit noted that CyberSource further concedes that the “map of credit card numbers” recited in step (b) can be as simple as a list of credit card transactions relating to a particular IP address. Finally, the Federal Circuit noted that step (c) does not limit claim 3 to any specific fraud detection formula or mathematical algorithm, but rather broadly purports to encompass any means of “utilizing the map of credit card numbers to determine if the credit card transaction is valid.”

The district court found that claim 3 fails to meet either prong of the machine-or-transformation test. The Federal Circuit agreed and agreed with the district court that the method of claim 3 simply requires one to “obtain and compare intangible data pertinent to business risks.” The mere collection and organization of data regarding credit card numbers and Internet addresses is insufficient to meet the transformation prong of the test, and the plain language of claim 3 does not require the method to be performed by a particular machine, or even a machine at all.

The Supreme Court affirmed the invalidity of Bilski’s claims. The Supreme Court declined to generally invalidate software patents and instead held that the Federal Circuit’s Machine-or-Transformation test is not the exclusive test to determining if a method is statutory.

The Federal Circuit then went on to claim 2, the Beauregard claim. A Beauregard claim, named after In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995), is a claim to a computer readable medium (e.g., a disk, hard drive, or other data storage device) containing program instructions for a computer to perform a particular process.

The Federal Circuit stated that regardless of what statutory category a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information. This case is thus similar to In re Abele, 684 F.2d 902 (CCPA 1982).

The Federal Circuit went on to say that in the present case, CyberSource had not met its burden to demonstrate that claim 2 is “truly drawn to a specific” computer readable medium, rather than to the underlying method of credit card fraud detection.

The Federal Circuit acknowledged that, after Abele, they have held that, as a general matter, programming a general purpose computer to perform an algorithm “creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.” In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994). But stated that they have never suggested that simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind falls within the Alappat rule. Thus, despite its Beauregard claim format, under Abele, we treat claim 2 as a process claim for patent-eligibility purposes.

The Federal Circuit stated that one could mentally perform the fraud detection method that underlies both claims 2 and 3 of the ’154 patent, as the method consists of only the general approach of obtaining information about credit card transactions utilizing an Internet address and then using that information in some undefined manner to determine if the credit card transaction is valid. Because claims 2 and 3 attempt to capture unpatentable mental processes (i.e., abstract ideas), they are invalid under § 101.

The Federal Circuit affirmed the district court holding.

The Federal Circuit decision can be found here:

www.cafc.uscourts.gov/images/stories/opinions-orders/09-1358.pdf

Microsoft Corp. v. i4i Limited Partnership et al., U.S. Supreme Court 2011 (Software Patents)

i4i sued Microsoft Corp. for willful infringement of a software patent. The Patent Act provides patentees with a presumption of validity under 35 U.S.C. 282. Since 1984, the Federal Circuit has read §282 to require a defendant seeking to overcome the presumption to persuade the fact finder of its invalidity defense by clear and convincing evidence.

Microsoft sought to change the presumption of validity. Instead of a “clear and convincing” standard, Microsoft proposed instead using a “preponderance of the evidence” standard. This would have, in effect, weakened or reduced the value of all issued U.S. patents.

More particularly, more than a year before filing its patent application, i4i had sold a software program known as S4 in the United States, but they disagreed over whether that software embodied the invention claimed in i4i’s software patent and therefore invalidated the patent. Relying on the undisputed fact that the S4 software was never presented to the Patent and Trademark Office (PTO) during its examination of the software patent application, Microsoft objected to i4i’s proposed jury instruction that the invalidity defense must be proved by clear and convincing evidence. The District Court nevertheless gave that instruction and rejected Microsoft’s alternative instruction proposing a preponderance of the evidence standard. The jury found that Microsoft willfully infringed the i4i software patent and had failed to prove the patent’s invalidity. The Federal Circuit affirmed, relying on its settled interpretation of §282.

The Supreme Court rejected Microsoft’s contention that a defendant need only persuade the jury of a patent invalidity defense by a preponderance of the evidence. The Supreme Court stated that where Congress has prescribed the governing standard of proof, its choice generally controls. They went on to reason that while §282 includes no express articulation of the standard of proof, where Congress uses a common-law term in a statute, the Court assumes the “term . . . comes with a common law meaning.” Safeco Ins. Co. of America v. Burr, 551 U. S. 47, 58. Here, by stating that a patent is “presumed valid,” §282, Congress used a term with a settled common-law meaning.

The Supreme Court also rejected Microsoft’s argument that a preponderance standard must at least apply where the evidence before the factfinder was not before the PTO during the examination process. The Court stated that it is true enough that, in these circumstances, “the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished,” KSR Int’l Co. v. Teleflex Inc., 550 U. S. 398, 426, though other rationales may still animate the presumption. But the question remains whether Congress has specified the applicable standard of proof. As established, Congress did just that by codifying the common-law presumption of patent validity and, implicitly, the heightened standard of proof attached to it.

There is a good reason for the strong presumption of validity that the “clear and convincing” standard provides. When an inventor files a software patent application, they give up trade secret rights before ever knowing if they will obtain patent rights. This is a good result for patent holders and a bad result for infringers and alleged infringers.

Bilski et al. v. Kappos Under Secretary of Commerce for Intellectual Property, Supreme Court, 2010 (Software Patents)

In October 2008, the Federal Circuit reviewed the decision of the Board of Patent Appeals and Interferences that sustained a rejection of all eleven of Bilski’s patent claims under 35 U.S.C. 101 as not directed to patent-eligible subject matter. Bilski sought patent protection for a method of hedging against risk in commodity trading. The Federal Circuit affirmed, holding that Bilski’s claims were not statutory under 35 U.S.C. 101. The Federal Circuit revived the Benson test, that a claimed process is patent-eligible under Section 101 if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. The Federal Circuit rejected its prior test of State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368, 1373 (1998) and AT&T Corp. v. Excel Communications Inc., 172 F.3d 1352, 1357 (1999) for determining whether a claimed invention was a patentable “process” under section 101–whether it produces a “useful, concrete, and tangible result.”

Bilski’s claims recited a series steps but not any machine or computer. Claim 1 is representative and recites:
1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:
(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
(b) identifying market participants for said commodity having a counter-risk position to said consumers; and
(c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

The remaining claims explain how claims 1 and 4 can be applied to allow energy suppliers and consumers to minimize the risks resulting from fluctuations in market demand for energy.

The Supreme Court affirmed the invalidity of Bilski’s claims. The Supreme Court declined to generally invalidate software patents and instead held that the Federal Circuit’s Machine-or-Transformation test is not the exclusive test to determining if a method is statutory.

The Supreme Court noted that Section 101 specifies four independent categories of inventions or discoveries that are patent eligible: “process[es],” “machine[es],” “manufactur[es],” and “composition[s] of matter.” The Supreme Court noted that they had stated in their earlier decision of Diamond v. Chakrabarty, 447 U.S. 303 that in choosing such expansive terms, Congress plainly contemplated that the patent laws would be given wide scope in order to ensure that ingenuity should receive a liberal encouragement. The Court’s precedents provide three specific exceptions to section 101’s broad principles: “laws of nature, physical phenomena, and abstract ideas.” While not required by the statutory text, these exceptions are consistent with the notion that a patentable process must be “new and useful.” The exceptions have defined the statute’s reach going back 150 years.

The Bilski case involved an invention that is claimed to be a “process” under section 101. 35 USC 100(b) defines “process” as: “process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”

The Supreme Court considered two proposed categorical limitations on “process” patents under section 101 that would have, if adopted, barred Bilski’s application: the machine-or-transformation test and the categorical exclusion of business method patents.

The Supreme Court noted that it had more than once cautioned that courts should not read into the patent laws limitations and conditions which the legislature has not expressed. In patent law, as in all statutory construction, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning. Adopting the machine-or-transformation test as the sole test for what constitutes a “process” violates these statutory interpretation principles. The Court stated that it was unaware of any “ordinary, contemporary, common meaning” of the definitional terms “process, art or method” of section 100(b) that would require these terms to be tied to a machine or to transform an article.

The Supreme Court’s previous decision Gottschalk v. Benson, 409 U.S. 63, 70 (1972) noted that transformation and reduction of an article to a different state or thing is the clue to the patentability of a process claim that does not include particular machines. At the same time, however, it explicitly declined to hold that no process patent could ever qualify if it did not meet machine or transformation requirements.

According to the Supreme Court, the machine-or-transformation test is a useful and important clue for determining whether some claimed inventions are processes under section 101. But the machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.” It is true that patents for inventions that did not satisfy the machine-or-transformation test were rarely granted in earlier eras, especially in the Industrial Age, but times change. The machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and manipulation of digital signals.

The Supreme Court stated that it was not commenting on the patentability of any particular invention, let alone holding that any of the above-mentioned technologies from the Information Age should or should not receive patent protection.

Section 101 similarly precludes the broad contention that the term “process” categorically excludes business methods. Federal law explicitly contemplates the existence of at least some business method patents. See 35 U.S.C. 273(b)(1).

Even though the Bilski application is not categorically outside of section 101, that does not mean that it is a process under section 101. Rather than adopting categorical rules, the Court resolved this case narrowly on the basis of its decisions in Benson, Flook, and Diehr, which show that Bilski’s claims are not patentable processes because they are attempts to patent abstract ideas. The concept of hedging, described in claim 1 and reduced to a mathematical formula in claim 4, is an unpatentable abstract idea, like the algorithms at issue in Benson and Flook. Allowing Bilski to patent risk hedging would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.

The Court went on to say that Bilski’s remaining claims are broad examples of how hedging can be used in commodities and energy markets. Flook established that limiting an abstract idea to one field of use or adding token postsolution components did not make the concept patentable. That is exactly what the remaining claims in petitioners’ application do.

The Supreme Court concluded by stating that it once again declined to impose limitations on the Patent Act that were inconsistent with the Act’s text. Bilski’s patent application can be rejected under precedents on the unpatentability of abstract ideas. The Court, therefore, did not need to define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in section 100(b) and looking to the guideposts in Benson, Flook, and Diehr.

The Supreme Court also cautioned that nothing in the opinion should be read as endorsing interpretations of section 101 that the Court of Appeals for the Federal Circuit has used in the past, e.g. State Street, 149 F.3d at 1373; AT&T Corp. 172 F.3d, at 1357. The Supreme Court finished by stating that in disapproving an exclusive machine-or-transformation test, the Supreme Court by no means foreclosed the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.

In summary, this decision did nothing much to harm software patents. It even stated that business method patents are sometimes acceptable, and are contemplated by the patent laws. However, no clear test was given as to what the test is for statutory subject matter. The machine or transformation test, though not the exclusive test, provides a useful and important clue as to whether a patent claim is statutory.

The Supreme Court decision can be found here:
http://www.supremecourt.gov/opinions/09pdf/08-964.pdf

A memo was released to examiners regarding this decision:
http://ipwatchdog.com/blog/USPTO_bilski_memo_6-28-2010.PDF

The memo says, in part,
“Significantly, the Supreme Court also indicated that a business method is, at least in some circumstances, eligible for patenting under section 101.”

“Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent-eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea.”

Thus, there is no significant change in U.S. Patent and Trademark Office practice at this point due to the Supreme Court Bilski decision.

On July 27, 2010, the U.S. Patent and Trademark Office issued a memorandum giving additional guidance related to the Bilski decision:

http://www.uspto.gov/patents/law/exam/bilski_guidance_27jul2010.pdf

June 1, 2009, Supreme Court grants cert. for Bilski

The Supreme Court of the U.S. has agreed to review the Bilski case discussed below. The Bilski case disavowed the controversial State Street Bank decision and severely limited the possibility of obtaining business method patents and put the validity of many into question. It also affects software patents that do not describe a lot of hardware, and, in fact, is relevant to all method patents.

The Bilski decision set forth a requirement that any process claim in a software patent must be tied to a particular machine or apparatus, or transform a particular article into a different
state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C.
§ 101.

The requirements for patentability of software has been in flux for 20 years. This History of Software Patents shows how attitudes towards software patents shift like a pendulum.