In Clarilogic v. FormFree Holdings, the Court Of Appeals upheld the District Court for the Southern District of California holding that the claims of U.S. Patent Application No. 8,762,243 (‘243 Patent) are ineligible under 35 U.S.C. § 101 because they are directed to an abstract idea and contain no additional elements that transform the nature of the claims into a patent-eligible application of the abstract idea.
patents binders isolated on the wooden table. 3D illustration.
The ‘243 Patent is entitled “System and Method for Electronic Account Certification and Enhance Credit Reporting.” Generally, the claimed computer implemented system gathers a potential borrower’s financial data from a third party, applies an “algorithm engine” to the gathered data, and outputs a report. The claims do not recite any specific rules implemented by the “algorithm engine.” Rather, the rules implemented by the “algorithm engine” are obtained from third parties who define rules used to identify information.
The Court noted that when “the focus of the claims” is “on collecting information, analyzing it, and displaying certain results of the collection and analysis,” the claims are directed to an abstract idea. Moreover, claiming an algorithm engine without defining a specific set of rules implemented by an algorithm engine performing the analysis is the “height of abstraction.”
Defendant Form Free argued that its invention is “transformative” and thus eligible for patent protection. Specifically, Form Free argued that the invention is “transformative” because it takes in financial data and outputs a report. The Court disagreed, stating that the claimed method simply changes the way electronic information is displayed using an unknown and unclaimed algorithm engine. As such, without any limitations in how the gathered data are changed, there is no “transformative” effect. After all, as the Court stated, “Data are still data.”
A business method claim, or any other type of method claim, must specifically define all the method stops including those that help make the method novel. Single processing data to arrive at an output is simply too abstract to be patent eligible subject matter.
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
