We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, July 16, 2012. Brief synopses are presented below.

CLS Bank Int’l v. Alice Corp. Pty. Ltd., Case No. 2011-1301 (Fed. Cir. July 9, 2012) (attached).

Alice sued CLS for infringement of four patents claiming methods, systems and computer programs for “a computerized trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate ‘settlement risk’.  Settlement risk is the risk that only one party’s obligation will be paid, leaving the other party without its principal.”  Slip Op. at 2. The district court granted summary judgment of invalidity based on a failure to claim patent eligible subject matter.

On appeal, the Federal Circuit reversed the district court, looking at notable precedent, such as the machine or transformation test and computer-specific opinions, which the majority summarized into the rule that “a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not.”  Slip Op. at 18.  The Federal Circuit identified a new rule that minimizes the need to make such a determination and strongly favors a conclusion of patentable subject matter when claims involve anything that might not be characterized as an abstract idea.  Applying this rule, the Federal Circuit concluded that Alice’s claims were directed to patent eligible subject matter. The Court emphasized the need to consider the claim as a whole rather than to generalize the invention as the district court did.

Preston v. Marathon Oil Co., Case No. 2011-1013, 2011-1026 (Fed. Cir. July 10, 2012) (attached).

Marathon hired Preston to work in Marathon’s coal bed methane well operation. After beginning work, Preston signed an Employee Agreement containing an IP assignment clause. Later, Preston developed a baffle system to improve machinery used to extract methane gas from water-saturated coal in a coal bed methane gas well. Marathon installed the system on wells. After Preston’s employment ended, both Marathon and Preston pursued patents. The district court declared Marathon the owner of the patents pursuant to the employment agreement and that Preston breached the agreement for failing to assign his rights. The Federal Circuit affirmed that Preston assigned his rights in two inventions to Marathon pursuant to his employment agreement, but vacated in part as to the judgment that plaintiff is in breach of that agreement because that assignment was automatic.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 16, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.