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.
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
President Trump's Termination of Member Gwynne Wilcox
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Breach of Contract Explained: Types and Consequences
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
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!
