UPDATE:  The Federal Circuit has vacated its decision and will take this case up en banc in early 2013.  Please see our October 9, 2012 post for more details.

SECOND UPDATE: The Federal Circuit issued an en banc decision holding the claims invalid.  Please see our May 13, 2013 post for more details.

Today, Mon., July 9, 2012 in CLS Bank v. Alice Corp., No. 2011-1301, the Federal Circuit (Linn, Prost (dissent) and O’Malley) found a computer-implemented trading platform for reducing settlement risks when exchanging stocks or currency was not invalid based on a permissive test of patentable subject matter.  This decision will further guide litigation away from the abstract § 101 patentability defense and toward the better-defined invalidity §§ 102, 103 and 112 defenses based on prior art or inadequate patent disclosure.

The Majority announced a permissive test for determining patentability of a computer-implemented invention that is passed if “it is not manifestly evident that a claim is directed to a patent ineligible abstract idea”, stating:

“Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible ‘abstract idea’ under 35 U.S.C. § 101.”

Judge Prost dissented, indicating that the Majority’s “manifestly evident” standard “is more of an escape hatch [in dealing with a difficult issue] than a yardstick.”