United States Court of Appeals
for the Federal Circuit
__________________________
BANCORP SERVICES, L.L.C.,
Plaintiff-Appellant,
v.
SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.),
Defendant-Appellee,
AND
ANALECT LLC,
Defendant.
__________________________
2011-1467
__________________________
Appeal from the United States District Court for the
Eastern District of Missouri in Case No. 00-CV-1073,
Judge Carol E. Jackson.
__________________________
Decided: July 26, 2012
__________________________
DAVID A. PERLSON, Quinn Emanuel Urquhart & Sulli-
van, of San Francisco, California, argued for plaintiff-
appellant. With him on the brief was CHARLES K.
VERHOEVEN; and IAN S. SHELTON, of Los Angeles, Califor-
nia.
BANCORP SERVICES v. SUN LIFE 2
MATTHEW B. LOWRIE, Foley & Lardner, LLP, of Bos-
ton, Massachusetts, argued for the defendant-appellee.
With him on the brief were AARON W. MOORE and KEVIN
M. LITTMAN.
__________________________
Before LOURIE, PROST, and WALLACH, Circuit Judges.
LOURIE, Circuit Judge.
Bancorp Services, L.L.C. (“Bancorp”) appeals from the
final decision of the U.S. District Court for the Eastern
District of Missouri, which entered summary judgment
that the asserted claims of U.S. Patents 5,926,792 and
7,249,037 (the “’792 patent” and “’037 patent”) are invalid
under 35 U.S.C. § 101. See Bancorp Servs., L.L.C. v. Sun
Life Assurance Co., No. 4:00-cv-1073 (E.D. Mo. May 25,
2011) (Final Judgment), ECF No. 411. We affirm.
BACKGROUND
Bancorp owns the ’792 and ’037 patents, both entitled
“System for Managing a Stable Value Protected Invest-
ment Plan.” The patents share a specification and the
priority date of September 1996. The ’792 patent has
been the subject of two prior appeals to this court. See
Metro. Life Ins. Co. v. Bancorp Servs., L.L.C., 527 F.3d
1330 (Fed. Cir. 2008) (vacating summary judgment of
noninfringement); Bancorp Servs., L.L.C. v. Hartford Life
Ins. Co., 359 F.3d 1367 (Fed. Cir. 2004) (reversing sum-
mary judgment of invalidity for indefiniteness).
As explained in our earlier opinions and in the district
court’s opinion now on appeal in this case, the patents’
specification discloses systems and methods for adminis-
tering and tracking the value of life insurance policies in
separate accounts. Separate account policies are issued
pursuant to Corporate Owned Life Insurance (“COLI”)
3 BANCORP SERVICES v. SUN LIFE
and Bank Owned Life Insurance (“BOLI”) plans. Under
separate account COLI and BOLI plans the policy owner
pays an additional premium beyond that required to fund
the death benefit, and specifies the types of assets in
which the additional value is invested. Banks and corpo-
rations use the policies to insure the lives of their employ-
ees and as a means of funding their employees’ post-
retirement benefits on a tax-advantaged basis. See Hart-
ford, 359 F.3d at 1369.
The value of a separate account policy fluctuates with
the market value of the underlying investment assets.
That poses a problem from an accounting standpoint, as
BOLI and COLI plan owners must ordinarily report, on a
quarter-to-quarter basis, the value of any policies they
own. Id. The volatility inherent in short-term market
values has made some banks and companies reluctant to
purchase these plans. Bancorp Servs., L.L.C. v. Sun Life
Assurance Co., 771 F. Supp. 2d 1054, 1056 (E.D. Mo.
2011). Stable value protected investments address that
problem by providing a mechanism for stabilizing the
reported value of the policies, wherein a third-party
guarantor (the “stable value protected writer”) guarantees
a particular value (the “book value”) of the life insurance
policy regardless of its market value. To offset the risk to
a potential guarantor for providing that service, the
guarantor is paid a fee and restrictions are placed on the
policyholder’s right to cash in on the policy. Hartford, 359
F.3d at 1369. As we previously explained, the asserted
patents “provide[] a computerized means for tracking the
book value and market value of the policies and calculat-
ing the credits representing the amount the stable value
protected writer must guarantee and pay should the
policy be paid out prematurely.” Id.
The asserted patents disclose specific formulae for de-
termining the values required to manage a stable value
BANCORP SERVICES v. SUN LIFE 4
protected life insurance policy. For example, the specifi-
cation discloses creating and initializing a fund by per-
forming particular “calculations and comparisons” to
determine an “initial unit value of the policy.” ’037 patent
col.12 ll.56–58; see also id. col.11 l.67–col.12 l.57, fig. 11.
The specification then discloses “processing [that] is
required at regular intervals to track existing funds.” Id.
col.12 ll.60–61; see also id. col.12 l.59–col.15 l.10, figs. 12–
16. Such processing includes the calculation of “fees” for
the individuals who manage the life insurance policy. Id.
col.12 l.65–col.13 l.15. That processing also includes the
computation of values used for determining “surrender
value protection investment credits,” which, as we previ-
ously explained, “means the difference between the actual
value of a protected investment and the targeted return
value of that investment at the time the protected life
insurance policy is surrendered.” Hartford, 359 F.3d at
1372. Those computations include the concept of a “tar-
geted return,” calculated as follows:
The Stable Value Protected funds provide an ini-
tial targeted return for the first period of an in-
vestment. Upon completion of the first period, the
value of the fund, the “market value,” is compared
with the “calculated” value of the fund which is
the “book value.” The “calculated” value of the
fund is calculated by multiplying the initial value
of the fund by (1+targeted return), wherein the
targeted return for the next period is calculated
using the formula:
TR=[(MV/BV)(1/D)×(1+YTM)]-1,
where [TR] is the targeted return, MV is the mar-
ket value of a fund, BV is the book value of a fund,
D is the duration of a fund and YTM is the cur-
rent yield to market. . . .
5 BANCORP SERVICES v. SUN LIFE
’037 patent col.3 ll.18–30; see also id. col.13 ll.44–53
(disclosing formulae for calculating a “policy value for the
present day” and a “policy unit value for the present
day”). Those computations also include the “duration of a
fund,” which is calculated according to a formula well-
known in the prior art. Id. col.3 l.28–col.4 l.5. As the
specification explains, “[u]sing the concepts of duration
and targeted return, the actual performance of the under-
lying securities in the fund is smoothed over time.” Id.
col.4 ll.6–8.
At issue on appeal from the ’792 patent are asserted
claims 9, 17, 18, 28, and 37. The asserted claims include
methods and computer-readable media. Claims 9 and 28
are independent method claims. Claims 9 reads:
9. A method for managing a life insurance policy
on behalf of a policy holder, the method compris-
ing the steps of:
generating a life insurance policy includ-
ing a stable value protected invest-
ment with an initial value based on a
value of underlying securities;
calculating fee units for members of a
management group which manage the
life insurance policy;
calculating surrender value protected in-
vestment credits for the life insurance
policy;
determining an investment value and a
value of the underlying securities for
the current day;
calculating a policy value and a policy unit
value for the current day;
storing the policy unit value for the cur-
rent day; and
one of the steps of:
BANCORP SERVICES v. SUN LIFE 6
removing the fee units for members of the
management group which manage the
life insurance policy, and
accumulating fee units on behalf of the
management group.
’792 patent col.16 l.55–col.17 l.8. Independent claim 28
claims “A method for managing a life insurance policy”
comprising steps that are not materially different from
the steps of claim 9. Id. col.19 ll.10–22. Claims 17 and 37
depend from independent claims 9 and 28, respectively,
and require that the methods steps “are performed by a
computer.” Id. col.17 ll.60–61; id. col.20 ll.32–33. Claim
18, the computer-readable medium claim, reads: “A
computer readable medi[um] for controlling a computer to
perform the steps” set out in method claim 9. Id. col.17
l.63–col.18 l.15.
Before us on appeal from the ’037 patent are asserted
claims 1, 8, 9, 17–21, 27, 28, 37, 42, 49, 52, 60, 63, 66–68,
72–77, 81–83, 87, 88, and 91–95. Independent claims 9,
28, and 52 claim a “method for managing a life insurance
policy” that is not materially different from the methods
claimed in the ’792 patent. For example, claim 9 reads:
9. A method for managing a life insurance policy
comprising:
generating a life insurance policy includ-
ing a stable value protected invest-
ment with an initial value based on a
value of underlying securities of the
stable value protected investment;
calculating fees for members of a man-
agement group which manage the life
insurance policy;
7 BANCORP SERVICES v. SUN LIFE
calculating credits for the stable value
protected investment of the life insur-
ance policy;
determining an investment value and a
value of the underlying securities of
the stable value protected investment
for the current day;
calculating a policy value and a policy unit
value for the current day;
storing the policy unit value for the cur-
rent day; and
removing a value of the fees for members
of the management group which man-
age the life insurance policy.
’037 patent col.16 ll.31–50. Each independent method
claim is further limited in a dependent claim requiring
that the method be “performed by a computer.” Id. claims
17, 37, 60. Independent claims 18 and 63 are directed to a
“computer readable medi[um] for controlling a computer
to perform the steps” set out in the method claims. Claim
18, for example, recites the same seven steps set forth in
method claim 9, above.
Independent claims 1, 19, and 42 of the ’037 patent
are system claims, which track the content of the afore-
mentioned method and medium claims. For example,
claim 1 reads:
1. A life insurance policy management system
comprising:
a policy generator for generating a life in-
surance policy including a stable value
protected investment with an initial
value based on a value of underlying
securities of the stable value protected
investment;
BANCORP SERVICES v. SUN LIFE 8
a fee calculator for calculating fees for
members of a management group
which manage the life insurance pol-
icy;
a credit calculator for calculating credits
for the stable value protected invest-
ment of the life insurance policy;
an investment calculator for determining
an investment value and a value of
the underlying securities of the stable
value protected investment for the
current day;
a policy calculator for calculating a policy
value and a policy unit value for the
current day;
digital storage for storing the policy unit
value for the current day; and
a debitor for removing a value of the fees
for members of the management
group which manages the life insur-
ance policy.
Id. col.15 ll.28–48.
In 2000, Bancorp sued Sun Life Assurance Company
of Canada (U.S.) (“Sun Life”) for infringement of the ’792
patent. In 2002, in a separate patent infringement suit
filed by Bancorp, the district court invalidated all claims
of the ’792 patent for indefiniteness. See Bancorp Servs.,
L.L.C. v. Hartford Life Ins. Co., No. 4:00-CV-70, 2002 WL
32727071 (E.D. Mo. Feb. 13, 2002). Bancorp and Sun Life
then jointly stipulated to dismiss their case due to collat-
eral estoppel arising from the district court’s invalidity
ruling in Hartford. The parties further agreed that if the
district court’s Hartford ruling was reversed on appeal
then their case would be reinstated. The district court
entered a judgment of conditional dismissal.
9 BANCORP SERVICES v. SUN LIFE
In 2004, we reversed the district court’s Hartford rul-
ing. Hartford, 359 F.3d 1367. The district court subse-
quently vacated its judgment of dismissal in the present
case. Bancorp Servs., L.L.C. v. Sun Life Assurance Co.,
No. 4:00-CV-1073 (E.D. Mo. July 22, 2004), ECF No. 77.
In 2009 Bancorp filed an amended complaint adding a
claim for infringement of the ’037 patent. The parties
then submitted a joint claim construction and prehearing
statement addressing numerous disputed claim terms in
the ’792 and ’037 patents. Before the court construed the
claims, Sun Life moved for summary judgment of invalid-
ity under § 101 for failure to claim patent-eligible subject
matter. The court stayed the briefing on Sun Life’s mo-
tion pending the Supreme Court’s decision in Bilski v.
Kappos, 130 S. Ct. 3218 (2010). After Bilski was decided,
briefing on Sun Life’s summary judgment motion com-
menced.
In a memorandum and order dated February 14,
2011, the district court granted Sun Life’s motion for
summary judgment of invalidity under § 101. Bancorp,
771 F. Supp. 2d at 1067. The court first noted its decision
to determine invalidity under § 101 without addressing
the parties’ claim construction dispute. Id. at 1059. The
court then concluded that there was no meaningful dis-
tinction between the asserted “process,” “system,” and
“media” claims, and that each would be analyzed as a
process claim. Id.; see also id. at 1065. Next, after review-
ing Bilski and other opinions, the court concluded that
“the machine-or-transformation test remains a useful tool
in determining whether a claim is drawn to an abstract
idea and thus unpatentable under § 101.” Id. at 1061.
Applying that test, the court evaluated the particular
limitations of the asserted claims and found them defi-
cient. On the machine prong, the court noted that the
specified computer components are no more than objects
BANCORP SERVICES v. SUN LIFE 10
on which the claimed methods operate, and that the
central processor is nothing more than a general purpose
computer programmed in an unspecified manner. Id. at
1064. Additionally, the court noted that “although it
would be inefficient to do so, the steps for tracking, recon-
ciling and administering a life insurance policy with a
stable value component can be completed manually.” Id.
at 1065. On the transformation prong, the court deter-
mined that the claims do not effect a transformation, as
they “do not transform the raw data into anything other
than more data and are not representations of any physi-
cally existing objects.” Id. at 1066. Finally, the court
analogized the asserted claims to those that the Supreme
Court found unpatentable in Bilski, Gottschalk v. Benson,
409 U.S. 63 (1972), and Parker v. Flook, 437 U.S. 584
(1978), and concluded that the claims were invalid under
§ 101 as directed to patent-ineligible abstract ideas.
Bancorp, 771 F. Supp. 2d at 1066–67.
After considering and denying Bancorp’s motion for
reconsideration, Bancorp Servs., L.L.C. v. Sun Life Assur-
ance Co., No. 4:00-CV-1073 (E.D. Mo. Apr. 27, 2011), ECF
No. 408, the court entered final judgment in favor of Sun
Life. Bancorp timely appealed. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
Summary judgment is appropriate where “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). We review a district court’s grant of summary
judgment without deference, reapplying the same stan-
dard as the district court and drawing all reasonable
inferences in favor of the nonmovant. Tokai Corp. v.
Easton Enters., Inc., 632 F.3d 1358, 1366 (Fed. Cir. 2011).
We review questions about patent-eligible subject matter
11 BANCORP SERVICES v. SUN LIFE
under 35 U.S.C. § 101 without deference. Research Corp.
Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 867 (Fed.
Cir. 2010).
I.
A preliminary question in this appeal involves the
matter of claim construction. As noted above, the district
court declined to construe numerous disputed terms prior
to considering invalidity under § 101. The court stated
that “[t]here is no requirement that claims construction
be completed before examining patentability.” Bancorp,
771 F. Supp. 2d at 1059. After the district court’s deci-
sion, we decided Ultramercial, LLC v. Hulu, LLC, in
which we stated that “[t]his court has never set forth a
bright line rule requiring district courts to construe
claims before determining subject matter eligibility.” 657
F.3d 1323, 1325 (Fed. Cir. 2011), vacated sub nom. Wild-
Tangent, Inc. v. Ultramercial, LLC, No. 11-962, 2012 WL
369157 (U.S. May 21, 2012). For support, we cited Bilski,
noting that the Supreme Court “f[ound] subject matter
ineligible for patent protection without claim construc-
tion.” Id. Although Ultramercial has since been vacated
by the Supreme Court, we perceive no flaw in the notion
that claim construction is not an inviolable prerequisite to
a validity determination under § 101. We note, however,
that it will ordinarily be desirable—and often necessary—
to resolve claim construction disputes prior to a § 101
analysis, for the determination of patent eligibility re-
quires a full understanding of the basic character of the
claimed subject matter.
Bancorp argues that we must either (1) vacate and
remand the district court’s judgment with instructions to
construe the claims in the first instance; or (2) adopt
Bancorp’s proposed constructions of the disputed claim
terms, because, as the nonmovant on summary judgment,
BANCORP SERVICES v. SUN LIFE 12
it is entitled to all reasonable inferences in its favor.
Bancorp argues that under its construction each claimed
“system” requires “one or more computers,” and thus
those claims cannot constitute abstract ideas. Bancorp,
while acknowledging that the specific hardware compo-
nents recited in the system claims are not present in the
method claims, asserts that a computer is necessary as a
practical matter to perform the claimed processes on
account of the “complex and dynamic nature of the inven-
tion,” and that the computer amounts to more than insig-
nificant extra-solution activity. Bancorp Br. 52.
Sun Life responds by arguing that even if we adopt
Bancorp’s proposed constructions, the claims are not
patent eligible. Sun Life Br. 38 (“Bancorp argues that the
Court should apply its constructions. That is fine.” (cita-
tion omitted)). According to Sun Life, assuming the
claims require a computer, that limitation merely
amounts to insignificant post-solution activity incapable
of rendering the claimed subject matter patent eligible.
Sun Life thus contends that the district court correctly
determined that the asserted claims relate to patent-
ineligible abstract ideas.
Numerous claim terms were disputed by the parties
at the district court. For purposes of the § 101 issue on
appeal, however, the parties’ disagreement boils down to
whether the claimed systems and methods require a
computer. Although the district court declined to con-
strue the claims, that does not preclude us from making
that legal determination on appeal. See Cybor Corp. v.
FAS Techs., Inc., 138 F.3d 1448, 1455 (Fed. Cir. 1998) (en
banc) (concluding that claim construction is a pure issue
of law). Just as a district court may construe the claims
in a way that neither party advocates, Exxon Chemical
Patents, Inc. v. Lubrizol Corp., 64 F.3d 1553, 1555 (Fed.
Cir. 1995) (“[T]he trial judge has an independent obliga-
13 BANCORP SERVICES v. SUN LIFE
tion to determine the meaning of the claims, notwith-
standing the views asserted by the adversary parties.”),
we may depart from the district court and adopt a new
construction on appeal, Praxair, Inc. v. ATMI, Inc., 543
F.3d 1306, 1323–24 (Fed. Cir. 2008) (adopting “a new
claim construction on appeal,” and noting that “the court
has an independent obligation to construe the terms of a
patent [and] need not accept the constructions proposed
by either party”).
Before proceeding to our § 101 analysis, we construe
the claims as follows. We conclude that the asserted
system claims require “one or more computers,” as Ban-
corp asserts and as Sun Life appears to concede. The
plain language of the system claims requires particular
computing devices, such as a “generator,” a “calculator,”
and “digital storage.” The specification supports our
construction, explaining that Figure 1, which shows “an
embodiment of the system of the present invention,”
depicts a “computer” and “a central processing unit for a
memory subsystem.” ’037 patent col.6 ll.44–47.
Regarding the computer-readable medium claims, the
specification explains that that term refers generally to a
“high density removable storage means,” id. col.7 ll.66–67,
such as a “compact disc,” id. col.6 ll.50–51, col.7 l.62.
Neither party appears to argue that “computer readable
media” should not carry this plain and ordinary meaning.
As for the method claims, the parties dispute whether
the steps require a computer to be performed. In resolv-
ing that issue, we must distinguish between the inde-
pendent and dependent claims. The plain language of the
independent method claims does not require a computer.
As noted above, however, each asserted independent
method claim is further followed by a dependent claim
requiring that the method be “performed by a computer.”
BANCORP SERVICES v. SUN LIFE 14
The doctrine of claim differentiation, while not a hard and
fast rule of construction, creates a presumption that the
independent method claims do not contain this limitation,
for “the presence of a dependent claim that adds a par-
ticular limitation raises a presumption that the limitation
in question is not found in the independent claim.” Lie-
bel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 910 (Fed.
Cir. 2004) (“[W]here the limitation that is sought to be
‘read into’ an independent claim already appears in a
dependent claim, the doctrine of claim differentiation is at
its strongest.”).
We conclude that the asserted independent method
claims do not require implementation on a computer. The
plain language of those claims does not require a com-
puter, and the doctrine of claim differentiation creates a
presumption that the independent claims, unlike the
dependent claims, do not require a computer to be imple-
mented. Bancorp fails to rebut that presumption with its
unpersuasive assertion that a computer is “inherent” in
the independent method claims. Bancorp Br. 52. As the
district court observed, “although it would be inefficient to
do so, the steps for tracking, reconciling and administer-
ing a life insurance policy with a stable value component
can be completed manually.” Bancorp, 771 F. Supp. 2d at
1065. Unlike the independent claims, however, the
dependent method claims are plainly limited to being
“performed by a computer.”
II.
We turn now to the issue of patent eligibility. Section
101 of the Patent Act defines patentable subject matter,
stating that “[w]hoever invents or discovers any new and
useful process, machine, manufacture, or composition of
matter, or any new and useful improvement thereof, may
obtain a patent therefore, subject to the conditions and
15 BANCORP SERVICES v. SUN LIFE
requirements of this title.” 35 U.S.C. § 101; see also 35
U.S.C. § 100(b) (“The term ‘process’ means process, art or
method, and includes a new use of a known process,
machine, manufacture, composition of matter, or mate-
rial.”). From those broad categories, the Supreme Court
has carved out three exceptions of subject matter ineligi-
ble for patent protection: “laws of nature, physical phe-
nomena, and abstract ideas.” Diamond v. Chakrabarty,
447 U.S. 303, 309 (1980); see also Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293
(2012). As the Court has explained, “[p]henomena of
nature, though just discovered, mental processes, and
abstract intellectual concepts are not patentable, as they
are the basic tools of scientific and technological work.”
Benson, 409 U.S. at 67. “[A] process is not unpatentable
simply because it contains a law of nature or a mathe-
matical algorithm,” and “an application of a law of nature
or mathematical formula to a known structure or process
may well be deserving of patent protection.” Diamond v.
Diehr, 450 U.S. 175, 187 (1981) (internal quotation marks
omitted). However, “limiting an abstract idea to one field
of use or adding token postsolution components d[oes] not
make the concept patentable.” Bilski, 130 S. Ct. at 3231.
In other words, a recitation of ineligible subject matter
does not become patent-eligible merely by adding the
words “apply it.” See Mayo, 132 S. Ct. at 1294.
Bancorp argues that its system and medium claims
cover tangible machines and manufactures and therefore
cannot be considered patent-ineligible abstract ideas
under § 101. According to Bancorp, the district court
ignored the computer and hardware limitations in those
claims when performing its § 101 analysis. Bancorp
further contends that its “method” claims are patent
eligible under our opinions in Research Corp. and Ul-
tramercial (the latter of which the Supreme Court vacated
BANCORP SERVICES v. SUN LIFE 16
after Bancorp filed its briefs). Bancorp contends that its
process claims have specific applications to the market-
place and require complex computer programming.
Bancorp also contends that the district court placed
improper weight on the machine-or-transformation test,
which, according to Bancorp, its process claims nonethe-
less satisfy.
Sun Life, in response, argues that Bancorp’s asserted
process claims are unpatentable under Bilski and the
Supreme Court’s other § 101 opinions. Sun Life asserts
that the process claims fail the machine-or-
transformation test because the claim steps do not require
a computer to be performed. Even if those claims re-
quired a computer, Sun Life contends, the claims are
unpatentable, because the routine use of a computer to
perform calculations cannot turn an otherwise ineligible
mathematical formula or law of nature into patentable
subject matter. Finally, Sun Life argues that the system
and medium claims merely paraphrase the unpatentable
method claims, and as a result they are not patent eligible
for the same reasons as the method claims.
A.
We first address Bancorp’s assertion that the district
court legally erred by extending the Supreme Court’s
prohibition against patenting abstract ideas to Bancorp’s
system and medium claims. In its § 101 analysis, the
district court perceived no difference between the claimed
methods, on the one hand, and the claimed systems and
media, on the other. Rather, the court noted that the
“specified machines appear to be no more than ‘object[s]
on which the method operates.’” Bancorp, 771 F. Supp. 2d
at 1064 (alteration in original) (quoting Graff/Ross Hold-
ings LLP v. Fed. Home Loan Mortg. Corp., No. 07-796,
2010 WL 6274263, at *5 (D.D.C. Aug. 27, 2010)). Previ-
17 BANCORP SERVICES v. SUN LIFE
ously sitting en banc, we declined in In re Alappat to
decide whether a claimed apparatus could be unpatenta-
bly abstract under § 101. Referring to the abstract-idea
exception as the “mathematical” exception, we stated:
“Even if the mathematical subject matter exception to §
101 does apply to true apparatus claims, the claimed
subject matter in this case does not fall within that excep-
tion.” 33 F.3d 1526, 1542 (Fed. Cir. 1994) (en banc)
(emphasis added). Subsequently, however, we explained
in CyberSource Corp. v. Retail Decisions, Inc. that we look
not just to the type of claim but also “to the underlying
invention for patent-eligibility purposes.” 654 F.3d 1366,
1374 (Fed. Cir. 2011). We applied that principle in con-
cluding that a claim directed to a “computer readable
medium,” despite its format, should be treated no differ-
ently from the comparable process claims held to be
patent ineligible under § 101. Id. at 1375. Most recently,
in CLS Bank International v. Alice Corp., we held that the
format of the various method, system, and media claims
asserted in that case “d[id] not change the patent eligibil-
ity analysis under § 101.” No. 2011-1301, 2012 WL
2708400, at *10 (Fed. Cir. July 9, 2012).
Thus, under Cybersource and CLS, a machine, sys-
tem, medium, or the like may in some cases be equivalent
to an abstract mental process for purposes of patent
ineligibility. As the Supreme Court has explained, the
form of the claims should not trump basic issues of pat-
entability. See Flook, 437 U.S. at 593 (advising against a
rigid reading of § 101 that “would make the determination
of patentable subject matter depend simply on the
draftsman’s art”); see also Mayo, 132 S. Ct. at 1294.
On the facts of this case, we hold that the district
court correctly treated the asserted system and medium
claims as no different from the asserted method claims for
patent eligibility purposes. For example, in the ’037
BANCORP SERVICES v. SUN LIFE 18
patent, method claim 9 recites a “method for managing a
life insurance policy comprising” seven steps, whereas
medium claim 18 recites “a computer readable media [sic]
for controlling a computer to perform” the same seven
steps of method claim 9, repeated word for word. Com-
pare ’037 patent col.16 ll.31–48, with id. col.17 ll.33–50.
There is no material difference between these two catego-
ries of claims in the asserted patents.
The equivalence of the asserted method and system
claims is also readily apparent. By way of example, we
compare method claim 9 and system claim 1 of the ’037
patent. Id. col.15 ll.28–48, col.16 ll.31–48. Claim 9 claims
a “method for managing a life insurance policy,” whereas
claim 1 of that patent claims “a life insurance policy
management system.” Claim 9 includes the step of “gen-
erating a life insurance policy,” whereas claim 1 includes
“a policy generator for generating a life insurance policy.”
Claim 9 includes the step of “calculating fees,” while claim
1 including “a fee calculator for calculating fees.” Claim 9
recites “calculating credits,” while claim 1 recites “a credit
calculator for calculating credits.” Claim 9 includes
“storing the policy unit value,” whereas claim 1 includes
“digital storage for storing the policy unit value.” And so
on. The only difference between the claims is the form in
which they were drafted. The district court correctly
treated the system and method claims at issue in this
case as equivalent for purposes of patent eligibility under
§ 101.
B.
Turning now to the district court’s ruling on the inva-
lidity of the asserted claims under § 101, we conclude that
the claims cover no more than abstract ideas and there-
fore do not recite patent-eligible subject matter. Ban-
corp’s primary argument boils down to the contention that
19 BANCORP SERVICES v. SUN LIFE
because its claims are limited to being performed on a
computer, they cannot claim only an abstract idea. Even
aside from the fact, explained above, that Bancorp’s
independent method claims do not require a computer,
Bancorp’s position is untenable.
Modern computer technology offers immense capabili-
ties and a broad range of utilities, much of which embod-
ies significant advances that reside firmly in the category
of patent-eligible subject matter. At its most basic, how-
ever, a “computer” is “an automatic electronic device for
performing mathematical or logical operations.” 3 Oxford
English Dictionary 640 (2d ed. 1989). As the Supreme
Court has explained, “[a] digital computer . . . operates on
data expressed in digits, solving a problem by doing
arithmetic as a person would do it by head and hand.”
Benson, 409 U.S. at 65. Indeed, prior to the information
age, a “computer” was not a machine at all; rather, it was
a job title: “a person employed to make calculations.”
Oxford English Dictionary, supra. Those meanings con-
veniently illustrate the interchangeability of certain
mental processes and basic digital computation, and help
explain why the use of a computer in an otherwise patent-
ineligible process for no more than its most basic func-
tion—making calculations or computations—fails to
circumvent the prohibition against patenting abstract
ideas and mental processes. As we have explained,
“[s]imply adding a ‘computer aided’ limitation to a claim
covering an abstract concept, without more, is insufficient
to render the claim patent eligible.” Dealertrack, Inc. v.
Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).
To salvage an otherwise patent-ineligible process, a
computer must be integral to the claimed invention,
facilitating the process in a way that a person making
calculations or computations could not. See SiRF Tech.,
Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir.
BANCORP SERVICES v. SUN LIFE 20
2010) (“In order for the addition of a machine to impose a
meaningful limit on the scope of a claim, it must play a
significant part in permitting the claimed method to be
performed, rather than function solely as an obvious
mechanism for permitting a solution to be achieved more
quickly, i.e., through the utilization of a computer for
performing calculations.”). Thus, as we held in Fort
Properties, Inc. v. American Master Lease LLC, the limita-
tion “using a computer” in an otherwise abstract concept
did not “‘play a significant part in permitting the claimed
method to be performed,’” 671 F.3d 1317, 1323 (Fed. Cir.
2012) (quoting Dealertrack, 674 F.3d at 1333), and thus
did not “impose meaningful limits on the claim’s scope,”
id. (quoting CyberSource, 654 F.3d at 1375). The com-
puter required by some of Bancorp’s claims is employed
only for its most basic function, the performance of repeti-
tive calculations, and as such does not impose meaningful
limits on the scope of those claims. See Benson, 409 U.S.
at 67 (invalidating as patent-ineligible claimed processes
that “can be carried out in existing computers long in use,
no new machinery being necessary,” and “can also be
performed without a computer”).
We agree with the district court that for purposes of
§ 101 there is no material difference between the claims
invalidated in Bilski and those at issue here. Bancorp,
771 F. Supp. 2d at 1066. In Bilski, the patent applicant
“attempt[ed] to patent the use of the abstract idea of
hedging risk in the energy market and then instruct[ed]
the use of well-known random analysis techniques to help
establish some of the inputs into the equation.” 130 S. Ct.
at 3231. Here, Bancorp’s patents “attempt to patent the
use of the abstract idea of [managing a stable value
protected life insurance policy] and then instruct the use
of well-known [calculations] to help establish some of the
inputs into the equation.” Id. As in Bilski, the claims do
21 BANCORP SERVICES v. SUN LIFE
not effect a transformation, and the fact that the required
calculations could be performed more efficiently via a
computer does not materially alter the patent eligibility of
the claimed subject matter. We discern no fault in the
conclusion of the district court, Bancorp, 771 F. Supp. 2d
at 1066, that the asserted claims do not meet either prong
of the machine-or-transformation test—which, while “not
the sole test for deciding whether an invention is a pat-
ent-eligible ‘process,’” remains “a useful and important
clue, an investigative tool, for determining whether some
claimed inventions are processes under § 101,” Bilski, 130
S. Ct. at 3227.
The principal precedent relied on by Bancorp in argu-
ing for patent eligibility is Research Corp. In that case,
the asserted patents claimed processes for enabling a
computer to render a halftone image of a digital image by
comparing, pixel by pixel, the digital image against a two-
dimensional array called a “mask.” 627 F.3d at 863. We
reversed the district court’s grant of summary judgment
that the asserted claims were invalid under § 101, con-
cluding that the processes were not “so manifestly” ab-
stract as to override the statutory language of § 101. Id.
at 868. In so holding, we observed that the claimed
“invention presents functional and palpable applications
in the field of computer technology.” Id. We also noted
that “inventions with specific applications or improve-
ments to technologies in the marketplace are not likely to
be so abstract” as to be ineligible for patent protection.
Id. at 869.
Research Corp. is different from the present case in
two critical respects. First, the claimed processes in
Research Corp. plainly represented improvements to
computer technologies in the marketplace. For example,
as compared to the prior art, the “inventive mask pro-
duce[d] higher quality halftone images while using less
BANCORP SERVICES v. SUN LIFE 22
processor power and memory space.” Id. at 865. No such
technological advance is evident in the present invention.
Rather, the claims merely employ computers to track,
reconcile, and administer a life insurance policy with a
stable value component—i.e., the computer simply per-
forms more efficiently what could otherwise be accom-
plished manually. Bancorp, 771 F. Supp. 2d at 1065.
Second, the method in Research Corp., which required
the manipulation of computer data structures (the pixels
of a digital image and the mask) and the output of a
modified computer data structure (the halftoned image),
was dependent upon the computer components required
to perform it. See CyberSource, 654 F.3d at 1376 (“[T]he
method [in Research Corp.] could not, as a practical
matter, be performed entirely in a human’s mind.”).
Here, in contrast, the computer merely permits one to
manage a stable value protected life insurance policy
more efficiently than one could mentally. Using a com-
puter to accelerate an ineligible mental process does not
make that process patent-eligible.
Bancorp additionally relies on SiRF, 601 F.3d 1319,
but that case also does not control the outcome here. In
SiRF, we evaluated the patent eligibility of a “method for
calculating an absolute position of a GPS receiver and an
absolute time of reception of satellite signals.” Id. at
1331. The GPS receiver, we noted, was “integral to each
of the claims at issue.” Id. at 1332. Observing that we
were “not dealing with a situation in which there [wa]s a
method that [could] be performed without a machine,”
and that there was “no evidence . . . that the calculations
[could] be performed entirely in the human mind,” we
concluded that the claims were eligible for patenting
under § 101. Id. at 1333. Bancorp seeks to analogize its
case to SiRF, contending that a computer “plays a signifi-
cant part” in its claims because they require “precise and
23 BANCORP SERVICES v. SUN LIFE
repetitive calculation.” Bancorp Br. 52. That misses the
point. It is the management of the life insurance policy
that is “integral to each of [Bancorp’s] claims at issue,”
not the computer machinery that may be used to accom-
plish it. See SiRF, 601 F.3d at 1332.
When the insignificant computer-based limitations
are set aside from those claims that contain such limita-
tions, the question under § 101 reduces to an analysis of
what additional features remain in the claims. See Mayo,
132 S. Ct. at 1297 (questioning, after setting aside the
claimed law of nature, “[w]hat else is there in the claims
before us?”). The asserted claims require determining
values—for example, “an initial value based on a value of
underlying securities,” “fee units,” “surrender value
protected investment credits,” “an investment value and a
value of the underlying securities for the current day,”
and “a policy value and a policy unit value for the current
day”—and then “storing,” “removing,” and/or “accumulat-
ing” some of those values. ’792 patent col.16 l.55–col.17
l.8. As the formulae in the specification indicate, the
determination of those values, and their subsequent
manipulation, is a matter of mere mathematical computa-
tion.
The district court correctly held that without the com-
puter limitations nothing remains in the claims but the
abstract idea of managing a stable value protected life
insurance policy by performing calculations and manipu-
lating the results. Bancorp, 771 F. Supp. 2d at 1066.
Bancorp’s claimed abstract idea impermissibly “pre-
empt[s]” the mathematical concept of managing a stable
value protected life insurance policy. Benson, 409 U.S. at
72 (rejecting claims that “would wholly pre-empt the
mathematical formula and in practical effect would be a
patent on the algorithm itself”); Flook, 437 U.S. at 594
(“[The claimed] process is unpatentable under § 101, not
BANCORP SERVICES v. SUN LIFE 24
because it contains a mathematical algorithm as one
component, but because once that algorithm is assumed to
be within the prior art, the application, considered as a
whole, contains no patentable invention.”).
Bancorp asserts that its claims are not abstract be-
cause they are limited to use in the life insurance market.
In Bilski the Supreme Court discredited a similar argu-
ment, explaining that although some of those claims
limited the hedging process to use in commodities and
energy markets, “Flook established that limiting an
abstract idea to one field of use or adding token postsolu-
tion components did not make the concept patentable.”
130 S. Ct. at 3231. Bancorp further contends that its
claims cannot be preemptive because Sun Life alleged
that its stable value protected products do not infringe
Bancorp’s claims. That argument, while creative, is
unpersuasive. The Federal Rules permit a party to plead
in the alternative. See Fed. R. Civ. P. 8(d)(3) (“A party
may state as many separate claims or defenses as it has,
regardless of consistency.”). Sun Life’s alternative asser-
tion of noninfringement does not detract from its affirma-
tive defense of invalidity under § 101.
Finally, our conclusion is not inconsistent with CLS,
which we decided after hearing oral arguments in this
appeal. In CLS, we reversed the district court and held
that method, system, and medium claims directed to a
specific application of exchanging obligations between
parties using a computer were patent eligible under § 101.
No. 2011-1301, 2012 WL 2708400, at *10–11. In faulting
the district court for “ignoring claim limitations in order
to abstract a process down to a fundamental truth,” id. at
*11, we explained that the asserted claims in CLS were
patent eligible because “it [wa]s difficult to conclude that
the computer limitations . . . d[id] not play a significant
part in the performance of the invention or that the
25 BANCORP SERVICES v. SUN LIFE
claims [we]re not limited to a very specific application of
the [inventive] concept,” id. at *12 (emphasis added).
Here, in contrast, the district court evaluated the limita-
tions of the claims as a whole before concluding that they
were invalid under § 101. Bancorp, 771 F. Supp. 2d at
1056–57, 1064–66. As we explained above, the computer
limitations do not play a “significant part” in the perform-
ance of the claimed invention. And unlike in CLS, the
claims here are not directed to a “very specific applica-
tion” of the inventive concept; as noted, Bancorp seeks to
broadly claim the unpatentable abstract concept of man-
aging a stable value protected life insurance policy. See
id. at 1066.
Because Bancorp’s asserted claims are directed to no
more than a patent-ineligible abstract idea, we affirm the
district court’s holding of invalidity under § 101.
CONCLUSION
We have considered Bancorp’s remaining arguments
and find them unpersuasive. We therefore affirm the
district court’s judgment that the asserted claims are
invalid.
AFFIRMED