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Court allows patenting of business methods in confusing “abstract idea” ruling

There are plenty of tests, but no clear standard, for counsel to use when determining if a method is patentable

The Federal Circuit’s July 9 decision in CLS Bank International v. Alice Corporation did little to alleviate the confusion that has been ravaging the world of intellectual property over abstract patents. The 2-1 ruling found that Alice Corp.’s business methods—involving a process for trading on a computer that uses a neutral third party to ensure both parties follow through on their obligations—were patentable subject matter. This was a reversal of the district court’s decision finding the patents invalid. The Federal Circuit’s decision further muddies the waters around what kinds of methods are patentable.

Here’s what we do know: 35 U.S.C. 101 allows the patenting of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The Supreme Court outlined three exceptions to this in its 1980 Diamond v. Chakrabarty decision: “The laws of nature, physical phenomena, and abstract ideas.” The trouble has come with defining just what qualifies as an abstract idea.

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