Federal Circuit Holds That a Computer-Aided Clearinghouse is a Patent-Ineligible Abstract Idea
By Laura Fishwick – Edited by Adam Lewin
Dealertrack, Inc. v. Huber, Nos. 2009-1566, 2009-1588, 2012 WL 164439 (Fed. Cir. Jan. 20, 2012)
The Court of Appeals for the Federal Circuit affirmed the U.S. District Court for the Central District of California’s grant of summary judgment regarding the invalidity of Dealertrack’s U.S. Patent 7,181,427 (filed Sep. 3, 1997) (“the ’427 patent”), which had claims that covered an automated clearinghouse system for car dealerships. The district court had applied the then-definitive “machine-or-transformation” test from In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc) (“Bilski I”), requiring the claimed process either to be tied to a particular machine or apparatus or to transform an article into a different state or thing. Dealertrack had not argued that its claim effected a transformation, and the district court found that Dealertrack’s patent did not involve a particular machine as required by Bilski I’s test because the computer involved was a general purpose computer that was not “specially programmed.” For this reason, the district court held that the subject matter of Dealertrack’s patent was not eligible for protection under 35 U.S.C. § 101 of the Patent Act because Dealertrack had claimed an abstract idea.
Reviewing the patentable subject matter issue de novo, the Federal Circuit held that Dealertrack had claimed “an abstract idea preemptive of a fundamental concept or idea that would foreclose innovation in this area,” and therefore its patent was invalid. The court found that the claim’s language was too broad in scope, and that neither including a general computer to the method nor restricting the method to a particular field of use saved the patent’s validity.