Awaiting the Outcome of CLS Bank v. Alice Corp.

by Dennis Crouch

Pollin Patent Licensing v. Commerce Bancshares (E.D.Mo 2013)

The following is a recent Court Order from Judge Audrey Fleissig.

IT IS HEREBY ORDERED that this matter shall be stayed pending the decision of the Federal Circuit in CLS Bank Intl v. Alice Corp., 685 F.3d 1341, 1356 (Fed. Cir. 2012), vacated, rehg granted, 2012 WL 4784336 (Fed. Cir. Oct. 9, 2012).

In the lawsuit, Pollin is asserting U.S. Patent No. 7,117,171.  Although the company has asserted the patent in at least 17 different lawsuits, it does not appear that any of the accused infringers has filed a request for rexamination or inter partes review. Instead almost all of the cases have ended in settlement.

Pollin’s invention claims priority back to a 1992 application. That means that the patent is now expired. However, Pollin may still be able to collect substantial back damages – so long as the patent is not renedered invalid by CLS Bank.  The 1992 invention focused being able to use a checking account to pay for a service without actually writing a check. The claims are broadly written to encompass the operation via the internet (without actually using those words).

Interestingly, it was Pollin who asked for the stay in this case. 

= = = = =

Pollin’s Claim 1 is as follows:

1. A system for generating authorized payments from financial accounts belonging to a plurality of payers, in payment of debts to a payee, comprising:

input means for performing an electronic information input process wherein a system operator contemporaneously enters information sufficient to identify a new payer previously unknown to the system and information specifying a payment to be generated from an account of that payer,

said information including a financial institution identification number, payer account identifier, and an amount to be paid from said payer’s account to said payee;

an institutional database comprising financial institution identification information;

institution verification means associated with said input means for receiving said financial institution identification number and comparing said financial institution identification number to entries in said institutional database,

wherein when said financial institution is found in the institutional database, the institution verification means retrieves identifying information about the institution and verifies the accuracy of said financial institution identification number, and

wherein when said financial institution is not found in the institutional database, an error indication is generated; and

output means connected to said input means for receiving said information specifying a payment and generating in electronic information form instructions for said payment to said payee.

19 thoughts on “Awaiting the Outcome of CLS Bank v. Alice Corp.

  1. 19

    Ned: “The Supreme Court punted and left the Federal Circuit to make the first cut on business methods that actually recite some hardware.”

    Why should the CAFC make any so called cuts to business methods that recite hardware in the claims, when the Supreme Court made it explicitly clear that no hardware is required for any method to be patent eligible subject matter? See, Bilski.

    But as in the “rent” (using the internet to rent A/V material), the rent concept is notoriously old. So what is patentable?

    The claims as a whole. That a concept may be old does not matter. It’s not the concept that is claimed. The claims must be to an application of a concept in which the concept is “integrated” into the process as a a whole. This transforms the process into an inventive application of the concept. The Court has been VERY clear on this. See Prometheus.

  2. 18

    Dennis Crouch said: “However, Pollin may still be able to collect substantial back damages – so long as the patent is not renedered invalid by CLS Bank”

    How could these claims be invalidated by CLS Bank case? By just reading the claims, I do not see a natural phenomenon, law of nature, or mathematic algorithm that is viewed as a law of nature. Nor do these claims “manifestly” consist of “a fundamental truth; an original cause; a motive” or can be performed entirely within the mind, thus they are not legally an abstract idea.

    The claims may be invalid under 102, 103, or 112, but legally there can be no doubt that if new and useful ( as of 1992) they pass 101.

    Furthermore, the only way to invalidate these claims under 101 would be to do as the dissent has done in CLS Bank, and ignore Diehr and the Prometheus Courts explicit teaching of “integration” and dissect the claims into eligible and ineligible subject matter.

    However if we are honest and objective then the correct legal approach would be to take the claims as an “inseparable whole” and proceed with “Integration Analysis”. Because as Judge Linn said:

    “Any claim can be stripped down, or simplified, removing all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed. But nothing in the Supreme Court’s precedent, nor in ours, allows a court to go hunting for abstractions by ignoring the concrete, palpable, tangible, and otherwise not abstract invention the patentee actually claims. It is fundamentally improper to paraphrase a claim in overly simplistic generalities in assessing whether the claim falls under the limited “abstract ideas” exception to patent eligibility under 35 U.S.C. § 101. Patent eligibility must be evaluated based on what the claims recite, not merely on the ideas upon which they are premised.”

    Such an approach as above would eviscerate all patent law.

  3. 17

    The apparent overriding factor, Les, would seem to be some sort of functional relationship.

    Why don’t we ask Malcolm what the controlling state of law is on the exceptions to the printed matter doctrine?

    Not only do these seem especially relevant here, I have heard that Macolm has volunteered a critical admission on this aspect of law.

    What say you, Malcolm?


  4. 16

    1. Your summary of the claim is not complete. Some of the received information is not compared to anything.

    2. The kind of information can make a patentable difference.

    For example, a claim that you would disparage by reducing it to receive information, process information, output information might actually be:

    receiving audio information containing spoken words in a first language;
    processing the received audio according to the Enbanc parcing and botchification algorithm; and
    outputting steam pressure pulses representative of a meaning of the spoken words of the first language in the binary language of vaporators.

    quite patentable….

  5. 15

    I’m having trouble parsing the output means connected to the input means.

    If the input means is my PC at home, shouldn’t the output means be … i dunno… some computer at some middle man that talks to my bank and arranges the payment?

    Is there some sense where that computer is connected to my pc?

  6. 14


    Ned, please remind yourself:

    Bilski: MoT not necessary,
    Prometheus: MoT not sufficient.

    You really need to break yourself from this MoT addiction.

  7. 13

    The claims here seem eligible for the new PGR for business methods. Would you expect that such a PGR to cost a couple of million to prosecute?

  8. 12

    Malcolm, agreed.

    The Benson court was close. It could have said this:

    A computer process is inherently mathematical and is ineligible subject matter as a matter of law (101). (Benson did not actually hold this because it left the door open on programmed computers possibly being eligible.)

    A process that transforms an article or machine or composition into a new state or thing is eligible regardless that a programmed computer is used in such a process. (Benson suggested this, Diehr confirmed it.)

    The Federal Circuit in Bilski got close as well. But, alas, we have the incomprehensible reversal by the Kennedy majority at the Supreme Court.

  9. 10

    The alleged read is on live operator assisted check-by-phone payments. The threat is the potential for a damages case that claims a per-transaction royalty, which could be a big deal for a company that does large volumes of that type of payment. There’s good stuff in the prosecution that might limit the claims significantly, and last I checked Pollin had settled all its cases before receiving a Markman order (though they’ve gone through the briefing process a number of times), suggesting they’re aware of that risk and don’t want to receive an unfavorable construction. But no one has taken a case far enough to find make that happen.
    I like the suggestion that there are reasons why those claims should fall, but the reality is that that plus a couple million dollars in legal costs will get you the chance to find out whether you’re right, and maybe you’re not. It can be more cost effective to buy certainty in the form of a license when the price is right. Sure that’s a sign of a legal system with major flaws, but that’s the one we have.

  10. 8

    the institution verification means

    This is a completely different structure from Granny’s password verification means!!!!

    /software-mouthbreather off

  11. 7

    Just reading the claim leads to nonsensical interpretations. The later “wherein” clauses appear to be modifying the “institution verification means” but there are no structures etc. that may have the things recited in the “wherein” clauses happen inside of them. Word to the wise: “wherein” simply means “in which”.

  12. 4

    The thinking of the USPTO on computer-implemented methods generally is that if it’s not novel, it must also not be obvious. The Examiners in the art units responsible for this j–k must simply have instructions not to make obviousness arguments or they simply lack the intelligence to write them.

    There is no “hindsight” in simply observing that (1) computers can receive, transmit and process any kind of information; (2) comparing information is old and well-known, in both computer-implemented and non-computer implemented methods; (3) reciting a ‘new” type of information that a computer receives/comares/transmits does not make the computer non-obvious in view of prior art computers, any more than re-naming the gravel “capable of being carried” by a dumptruck makes the claimed dumptruck non-obvious in view of prior art dumptrucks. Call it black gravel, white gravel, substrate gravel, hill gravel, skyscraper foundation gravel, granny’s path gravel, cat box gravel. Doesn’t change the analysis.

    That’s just one approach to get rid of a lot of computer-implemented j-nk such as the above.

  13. 3

    Malcolm, it is not amazing given the likes of State Street Bank and the failure to define terms in Bilski.

    The Supreme Court punted and left the Federal Circuit to make the first cut on business methods that actually recite some hardware.

    But as in the “rent” (using the internet to rent A/V material), the rent concept is notoriously old. So what is patentable?

  14. 2

    A method comprising receiving information, comparing said information to previously received information, and reporting the results of said comparison. Using a p.c.b.

    The kind of information being compared makes no patentable difference. It doesnt matter if it’s financial information, financial institution information, Granny’s DVDs information, son’s credit card information, robot car location information, auto part availability information, real estate availability information, bookshelf space availability information, grocery store shelf information, judge’s shoe size information, favorite burger condiment information, or any other kind of information.

    It’s amazing that anybody would take a license to this j-nk. I wonder what “techniques” this troll employes to threaten its victims.

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