Today, Thu., July 26, 2012, in Bancorp v. Sun Life, No. 2011-1467, the Federal Circuit (Lourie, Prost and Wallach) revived the § 101 patent eligibility defense against computer-based inventions, holding that claims to a method for administering and tracking the value of life insurance policies were not patentable because the computer limitations were not “integral to the claimed invention” or limited to “a very specific application of the inventive concept”, but merely involved computers doing calculations more efficiently than could be done by mental processes.  This is a significant decision to review with respect to patent eligibility of computer inventions, and limits the recent CLS decision of July 9, 2012 that appeared much more permissive on what computer inventions are patentable.

The Court ruled that construing the patent claims before assessing patent eligibility usually is helpful, but not required.  In this case, the key issue is whether the claims require a computer and the Court held that is the case for most of the claims.  The Court also held that the form of these particular claims – e.g., system, method, computer-readable medium – did not “trump the basic issues of patentability” and they could be treated the same in assessing whether they were “equivalent to an abstract mental process for purposes of patent eligibility.”

The Court stated that computers generally are great for innovation, but “[a]t its most basic … a ‘computer’ is ‘an automatic electronic device for performing mathematical or logical operations.”  Prior to the information age, a “computer” was defined as “a person employed to make calculations.”  This illustrates “the interchangeability of certain mental processes and basic digital computation.”  Thus, for patentability, “a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not.”

In this case, a computer is “employed only for its most basic function [of] perform[ing] repetitive calculations.”  The fact that a computer could perform calculations “more efficiently” did not render the claims patentable.  In this case, “[i]t is the management of the life insurance policy that is ‘integral to each of [the patentee’s] claims at issue,’ not the computer machinery that may be used to accomplish it.”  Without the computer limitations, “nothing remains in the claims but the abstract idea of managing a stable value protected life insurance policy by performing calculations and manipulating the results.”  This would “impermissibly ‘pre-empt’ the mathematical concept of managing a stable value protected life insurance policy.”

The Court distinguished its decision from the CLS case where “it was difficult to conclude that the computer limitations … did not play a significant part in the performance of the invention or that the claims were not limited to a very specific application of the inventive concept.”  In this case, the computer limitations “do not play a ‘significant part’ in the performance of the claimed invention” and were not directed to “a very specific application” of the inventive concept.  The claims were thus held invalid for claiming unpatentable subject matter.