The Court of Appeals for the Federal Circuit held that a patent on a method for providing financial data indicating financial risk about an individual using an “algorithm engine”, which engine itself is not claimed, nor are the claims limited by any rules that are used to complete the various method steps attributed to the algorithm engine defines ineligible patent subject matter under the Patent Act, 35 U.S.C. section 101. Clarilogic Inc. v. FormFree Holdings Corp., Case No. 2016-1781 (Fed. Cir. March 15, 2017) (Available Here).
The Court affirmed a lower court ruling on summary judgment motion that the claims of the ‘243 patent are ineligible under 35 U.S.C. § 101, Alice Corp. v. CLS Bank Int’l., 134 S. Ct. 2247, 2354 (2014) and Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013).
Patent is entitled “Systems and Methods for Electronic Account Certification and Enhanced Credit Reporting.” Claim 1 of the’243 patent is reproduced below.
Claim 1 is representative of the invention: 1. A computer-implemented method for providing certified financial data indicating financial risk about an individual, comprising: (a) receiving a request for the certified financial data; (b) electronically collecting financial account data about the individual from at least one financial source, (c) transforming the financial account data into a desired format; (d) validating the financial account data by applying an algorithm engine to the financial account data to identify exceptions, wherein the exceptions indicate incorrect data or financial risk; (e) confirming the exceptions by collecting additional data and applying the algorithm engine to the additional data, (f) marking the exceptions as valid exceptions when output of the algorithm engine validates the exceptions; and (g) generating, using a computer, a report from the financial account data and the valid exceptions, wherein the financial account data comprises at least one of real-time transaction data, real time balance data, historical transaction data, or historical balance data; and the algorithm engine identifies a pattern of financial risk; the method is computer implemented, and steps (c), (e), and (f) are executed via the computer or a series of computers.
The Court held that the algorithm engine itself is not claimed, nor are the claims limited by any rules that are used to complete the various method steps attributed to the “algorithm engine.”
Section 101 defines patent-eligible subject matter and recent Supreme Court cases have limited the scope of what is patent eligible subject matter. See Alice Corp. v. CLS Bank Int’l., 134 S. Ct. 2247, 2354 (2014); and Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013). Alice Corp defines a two step process. In Step 1, the court makes a determination as to whether an abstract idea is claimed. Step 2 determines whether there is a transformative effect in the data or machine or an element in the physical world.
“Peculiar to this case is that the algorithm engine mentioned in the claim is not claimed, identified, or explained. To be sure, claiming an algorithm does not alone render subject matter patent eligible. See Gottschalk v. Benson, 409 U.S. 63, 71-72 (1972). But a method for collection, analysis, and generation of information reports, where the claims are not limited to how the collected information is analyzed or reformed, is the height of abstraction.”
In contrast to Diehr, claim 1 in the ‘243 patent recites a method that changes the way electronic information is displayed via an unknown and unclaimed process. Absent any limitation to how the data are changed, there is little, if any, transformative effect. Data are still data. The ‘243 patent does not claim the technical manner in which financial data is gathered, analyzed, or output. It does not claim any proprietary risk-assessment algorithm. The claims of the ‘243 patent therefore do not clear Alice Step Two.