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Patent Invalidated in 1st Opinion to Invoke Alice v. CLS Bank

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By Mark Wilson, Esq. on September 09, 2014 4:12 PM

Those of us deeply nerded into patent litigation -- and let's face it, if you're reading this now, that's you -- were pleased and surprised when the U.S. Supreme Court decided Alice Corp v. CLS Bank International last term. With Alice, the Court said that taking an obvious, otherwise non-patentable idea and adding "on a computer" to the end of it doesn't suddenly make it patentable. In Alice, that was a calculation of risk in a financial transaction, something Justice Thomas said has been around forever.

Post-Alice, the nerds (you know, you and me) hoped and prayed that the decision signaled the end of "patent trolls" that claimed a right to inventions only because the person filing the patent did little more than take a universal concept and make software out of it. From the Federal Circuit, here comes the first post-Alice appeal to invoke Alice.

BuySAFE v. Google

BuySAFE Inc. sued Google in 2011, claiming that Google Trusted Stores violated its patent on certifying third-party financial transactions. The district court case was decided a year before Alice came to the Supreme Court, but nevertheless, the district court concluded -- based on the Federal Circuit's 2013 en banc opinion in Alice -- that BuySAFE's patent was an "abstract concept" not saved from abstractness by "explicitly reciting a 'computer' in each independent claim."

Really, there were two question, the court said. The first is what qualifies as an "abstract idea." The second is what's necessary to transform such an idea into something patentable. Relevant to BuySAFE, "a fundamental economic practice long prevalent in our system of commerce" is abstract. BuySAFE's "invention" -- a "transaction performance guarantee" -- was unequivocally "of ancient lineage."

With Alice, the Federal Circuit easily answered the second question: "The Court in Alice made clear that a claim directed to an abstract idea does not move into section 101 eligibility territory by "merely requir[ing] generic computer implementation." BuySAFE's claims took the old idea of a transaction guarantee, slapped "on a computer" on it, and called it a patent. After Alice, that's not nearly good enough -- and rightly so.

Some Other Key Elements

It wasn't just Alice that led to this result. The Recorder noted that Chief Judge Randall Rader had retired from the Federal Circuit Court just before Supreme Court ruled in Alice: "Rader had led the charge against Google at the March 5 argument. 'I think if you win on this case, Google loses its page rank patent," Rader warned Mayer Brown partner Andrew Pincus at one point." Judge Rader also flippantly suggested at oral argument that if BuySAFE's concept was abstract, so was Google's business model: "It's something you could do on a pad and paper ... It's a rather simple algorithm. It's a series of steps which -- at its core -- is very general and very easily applied."

Well, at least he's not on the court anymore.

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