Fort Properties, Inc. v. American Master Lease LLC
671 F.3d 1317
| Fed. Cir. | 2012Background
- Patented '788 real estate investment tool intended to enable tax-free exchanges under §1031.
- District court invalidated all forty-one claims under §101 using the machine-or-transformation test.
- Fort Properties sued AML; district court granted summary judgment for Fort Properties.
- Court of Appeals reviews de novo; §101 questions are law.
- In light of Supreme Court guidance (Bilski), the tool is not patent-eligible.
- Claims 1-41 are invalid as abstract ideas despite ties to deeds and real property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims 1-31 meet §101 as a patent-eligible process | Fort Properties argues claims recite abstract idea rather than a transformative process | AML argues claims constitute a patentable real-world process | Unpatentable abstract idea under §101 |
| Whether claims 32-41, with a computer limitation, become patent-eligible | Fort Properties contends computer element is insufficient to confer eligibility | AML contends computer use adds meaningful limits | Computer limitation is insignificant post-solution activity; still unpatentable |
| Whether the combination of deeds, contracts, and real property transforms the abstract concept | Potential real-world tying to tangible objects could render eligible | Physical connections do not remove abstract nature | Claims remain abstract; do not satisfy §101 |
Key Cases Cited
- Diamond v. Diehr, 450 U.S. 175 (Supreme Court (1981)) (application of math with a known process may be patentable)
- Gottschalk v. Benson, 409 U.S. 63 (Supreme Court (1972)) (mathematical algorithms as abstract ideas not patentable)
- Parker v. Flook, 437 U.S. 584 (Supreme Court (1978)) (post-solution activity cannot validate abstract ideas)
- Bilski v. Kappos, 561 U.S. 593 (Supreme Court (2010)) (hedging abstract idea; not patentable despite field restrictions)
- In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009) (mandatory arbitration method claims insufficient for §101)
- In re Schrader, 22 F.3d 290 (Fed. Cir. 1994) (physical effects in claims do not impart patentability)
- CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011) (computer-implemented abstract ideas require meaningful limits)
- Diehr, Diamond v. Diehr (Supreme Court (1981)) (industrial process with math/computer can be patentable)
- Benson and Flook, (Gottschalk/Benson; Flook) (Supreme Court 1972–1978) (core abstract ideas not patentable)