Clarilogic, Inc. v. Formfree Holdings Corporation
681 F. App'x 950
| Fed. Cir. | 2017Background
- FormFree Holdings appealed the Southern District of California’s grant of Clarilogic’s summary judgment that claims of U.S. Patent No. 8,762,243 are ineligible under 35 U.S.C. § 101.
- The ’243 patent claims a computer-implemented method to provide certified financial data indicating an individual’s financial risk by collecting financial account data, transforming it, validating it using an “algorithm engine,” confirming exceptions, and generating a report.
- The claims do not disclose or claim the internal workings of the asserted “algorithm engine”; the specification states the engine may receive rules from third parties.
- The district court held the claims were directed to an abstract idea (gathering, analyzing, and reporting financial information) and relied on conventional computer functions; proprietary risk analysis was unclaimed and undescribed.
- The Federal Circuit reviews de novo whether claims are § 101-ineligible and applies the two-step Alice framework to determine whether the claims are directed to an abstract idea and, if so, whether an inventive concept saves them.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the claims are directed to an abstract idea under Alice step one | FormFree: claims are transformative — they take financial data and produce a certified report (analogous to Diehr) | Clarilogic: claims merely collect, analyze, and display financial data; algorithm is unclaimed and unspecified | Held: Directed to the abstract idea of gathering/analyzing financial info (ineligible at step one) |
| Whether the claims contain an "inventive concept" under Alice step two | FormFree: the claimed process is a patent-eligible transformative application | Clarilogic: claims use only generic computer functions; no proprietary algorithm or technical improvement | Held: No inventive concept; reciting generic computer implementation and an unspecified algorithm is insufficient |
Key Cases Cited
- Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2247 (Sup. Ct.) (establishes two-step framework for abstract-idea analysis)
- Diamond v. Diehr, 450 U.S. 175 (Sup. Ct.) (claims that transform physical articles may be patentable despite using a mathematical algorithm)
- Bilski v. Kappos, 561 U.S. 593 (Sup. Ct.) (business-method/abstract-idea precedents)
- Gottschalk v. Benson, 409 U.S. 63 (Sup. Ct.) (holding that claiming a mathematical algorithm does not render subject matter patent eligible)
- Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir.) (claims directed to collecting/analyzing/displaying data are abstract)
- Content Extraction & Transmission LLC v. Wells Fargo Bank, 776 F.3d 1343 (Fed. Cir.) (search for inventive concept requires significantly more than abstract idea)
- McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir.) (direction on analyzing claims as a whole for Alice step one)
Disposition
Affirmed: the Federal Circuit upheld the district court’s summary judgment finding the ’243 patent claims ineligible under § 101.