In an unanimous decision, the U.S. Supreme Court issued its opinion in Alice Corp. v. CLS Bank Int'l., finding that the patent claims at issue were invalid as being directed to patent ineligible subject matter (under 35 U.S.C. § 101). While not exactly a welcomed decision, the outcome in the case was consistent with prior U.S. Supreme Court cases and consistent with our first hand observations and predictions after hearing the oral augments in this case as previously reported in our article entitled, "Eyewitness Insights on Arguments Heard by the U.S. Supreme Court on the Patentability of Computer Implemented Methods." The invalid claims included both computer-implemented business method claims as well as computer system claims in which the computer system performed various business methods. (See. e.g. footnote 2, page 2 of the opinion for a representative method claim and our prior OP-IP blog post, "Déjà vu all over again..." for a representative system claim). This is the most recent case in which the U.S. Supreme Court has weighed in on what constitutes patent eligible subject matter (under 35 U.S.C. § 101), building on its prior decisions in the business method context (Bilski v. Kappos) and more recently in the biotechnology context (Mayo v. Prometheus and Association For Molecular Pathology. v. Myriad Genetics, Inc.).
The specific question before the Supreme Court was whether
computer-implemented inventions, including claims to
computers/computer systems, software, and processes are eligible
for patent consideration. The Supreme Court had to decide
whether such computer-implemented inventions are patent eligible by
qualifying as "a process, machine, manufacture, or composition
of matter". Alternatively, the Supreme Court had to
decide whether computer-implemented inventions fall within one of
the Court's previously identified exceptions to patent eligible
subject matter, namely, "Laws of nature, Natural phenomena and
Abstract ideas" ("LNA"). In answering these
questions, the Supreme Court looked to the patent claims at issue
to determine if they were directed to patent ineligible subject
matter and thereby invalid.
In this case, the Supreme Court decided that the financial
method claims were directed to a "fundamental economic
practice" of the use of the "concept of intermediate
settlement," "long prevalent" in use, and thus an
"'abstract idea' beyond the scope of §
101." Applying the U.S. Supreme Court's own
precedent on the prohibition of patenting "Laws of Nature,
Natural Phenomena, and Abstract Ideas" ("LNA"), the
Court found the method claims to be invalid as being directed to
ineligible subject matter under 35 U.S.C. § 101. In
addition, the Supreme Court also found the computer system claims
to be invalid as being directed to patent ineligible subject matter
based on a finding that the computer system claims "merely
[recite] a generic computer" which does not transform "a
patent-ineligible abstract idea [i.e. an abstract method] into a
patent-eligible invention."
In reaching its decision, the Supreme Court extended its two-step
analysis test for determining patent eligibility of patent claims
announced in Mayo v. Prometheus. Step 1 is examining the
patent claim to determine if the claim is directed to one of the
three patent ineligible concepts (namely LNA). If the claim
is directed to one of the three patent ineligible concepts, then
Step 2 is determining whether the claim includes an "inventive
concept" –i.e., an element or combination of elements
that is "sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the [ineligible
concept] itself." Although this appears to blur the
distinction between determining patent eligibility under
§101 and novelty and non-obviousness under 35 U.S.C.
§§ 102 and 103, one can distill step 2 down to
determining whether a patent claim recites a meaningful application
of the LNA so that the claim is not merely the LNA performed in a
computer environment.
Thus, the test for patent eligibility under § 101 for
computer implemented methods, including business methods, is the
same as the test for patent eligibility of biotechnology
claims.
Step 1: Is the patent claim directed to a LNA. If no, then
the patent claim does not raise a § 101 issue. If yes,
then step 2.
Step 2: If the claim is directed to a LNA, does the claim put
meaningful limitations on the LNA and/or apply the LNA in a way
that limits the LNA and thereby claims less than the LNA,
itself.
Like the prior U.S. Supreme Court cases of Bilski v. Kappos, Mayo
v. Prometheus and Association for Molecular Pathology v. Myriad
Genetics, Inc., we now have a fourth example of patent claims which
are not patent eligible. Regrettably, in recent years, we
have not had a case in which patent claims were held to be valid
under §101. Therefore, it remains a challenge for patent
practitioners to know what the U.S. Patent Office and the courts,
all the way up to the Supreme Court, will find to be patent
eligible. While each decision makes it more clear as to what
is not patent eligible, we still do not have clear vision on what
patent claims are absolutely patent eligible.
In addition, the Alice case leaves additional unanswered
questions. For example, the Court never defines the term,
"abstract idea." The Court merely equates
"fundamental economic practice" of the use of the
"concept of intermediate settlement", "long
prevalent" in use, as an "abstract idea." What
we do not know is how to analyze a patent claim to determine
whether a patent claim is directed to a "fundamental economic
principle," let alone some other concept qualifying as an
"abstract idea."
Finally, the U.S. Patent and Trademark Office ("USPTO")
is likely to issue interim examination guidelines for examining
patent applications with claims directed to computer implemented
methods and systems in view of this decision. The USPTO
previously issued interim guidelines after Bilski v. Kappos, Mayo
v. Prometheus and Association for Molecular Pathology v. Myriad
Genetics, Inc. As needed, we will issue future updates with
relevant information regarding the determination of patent eligible
subject matter.
We at Stites & Harbison evaluate clients' inventions and
identify subject matter that is likely to be patent eligible.
Notwithstanding the outcome in this case, the protection of
one's intellectual property (including computer implemented
methods and business methods) through patents will remain a vital
tool for profiting from your business' intellectual
capital. Please feel free to contact us if you have would
like us to evaluate your business and its intellectual
property.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.