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Computer-Aided Clearinghouse Is Not Patent Eligible Subject Matter

Friday, May 18th, 2012

The Court of Appeals for the Federal Circuit (”Federal Circuit”) has held that a computer aided method of managing a credit application, by receiving data, sending credit data and forwarding funding decision (with certain alternative steps of selectively sending portions data) is not patent eligible subject matter under 35 U.S.C. § 101. Dealertrack, Inc. v. Huber, Case No. 2009-1566 (Fed. Cir. Jan. 20, 2012) (available here).

One view of this case involves the problem associated with the use of alternative “OR” claim language to define inventive claim elements D1, D2, D3 or D4. See the claim set forth below. The truncated “nominal” claim defining the invention with bracketed elements A, B, C. D and D1 is reproduced below.

 ”A computer aided method of managing a credit application, the method comprising the steps of: [A] receiving credit application data from a remote application entry and display device; [B] selectively forwarding the credit application data to remote funding source terminal devices; [C] forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device; [D] wherein the selectively forwarding the credit application data step further comprises: [D1] sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time.”

Dealertrack’s claimed inventive process in its simplest form includes three steps: receiving data from one source (step A), selectively forwarding the data (step B, performed more specifically in step D1), and forwarding reply data to the first source (step C). “The claim ‘explain[s] the basic concept’ of processing information through a clearinghouse, just as claim 1 in Bilski II ‘explain[ed] the basic concept of hedging.’ The steps that constitute the method here do not ‘impose meaningful limits on the claim’s scope.’ Neither Dealertrack nor any other entity is entitled to wholly preempt the clearinghouse concept.” Slip Opn. p. 35 (quoting In re Bilski, 545 F.3d 943, 961-62 (Fed. Cir. 2008) (en banc) (”Bilski I”); Bilski v. Kappos, 130 S. Ct. 3218, 3231 (2010) (Bilski II”); Gottschalk v. Benson, 409 U.S. 63, 71-72 (1972)). “The claims were silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method.” p. 35.

“The notion of using a clearinghouse generally and using a clearinghouse specifically to apply for car loans, like the relationship between hedging and hedging in the energy market in Bilski II, is of no consequence without more. See Diehr, 450 U.S. at 191 (noting that the principle that a mathematical formula ‘is not accorded the protection of our patent laws . . . cannot be circumvented by attempting to limit the use of the formula to a particular technological environment’ (emphasis added)).” p. 37 (citing Diamond v. Diehr, 450 U.S. 175, 191 (1981).

In conclusion, receiving data, sending credit application data and forwarding funding decision data and simultaneously sending the credit data to several funding sources is too abstract and not a “machine” under the “machine or transformation” (MOT) test. Also, no transformation of data was present. Compare this case to Ultramercial LLC v. Hulu LLC, Case No. 2010-1544 (Fed. Cir. Sept. 15, 2011) wherein the selective access, and sometimes free access, ad display, tracking transactions and making payment was found to be patent eligible subject matter.

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