Canada: Alice v. CLS Bank And Patent Eligibility Of Computer-Implemented Innovations

Last Updated: July 11 2014
Article by Edward T. Fan and Henry Bian

Following on the recent U.S. Supreme Court (the Court) decision in Alice v. CLS Bank (Alice), the U.S. Patent and Trademark Office (PTO) issued preliminary instructions (PTO Guidance) that use a two-part analysis for determining patent-eligible subject matter to its examiners.

Framework for Determining Patentability

In Alice, the Court found that patent claims—which were directed to facilitating the exchange of financial obligations between parties using a computer system as an intermediary to reduce settlement risk—were too abstract to be patent eligible. In reaching its finding, the Court adopted the two-part framework that was used in an earlier decision in Mayo v. Prometheus to distinguish ineligible patents from eligible ones. The first part of the framework provides that a claim should be analyzed to determine if it is directed to one of the patent-ineligible exceptions (i.e., if the claim is directed to a law of nature, a natural phenomenon or an abstract idea)—and if it is, then part two of the framework is engaged. In part two of the analysis, the elements of the claim are considered individually and "as an ordered combination" to determine if the additional elements "transform the nature of the claim" into a patent-eligible application.

Alice and the PTO Guidance gave a number of examples of what would generally be seen as abstract ideas under part one of the Mayo framework, including fundamental economic practices, methods of organizing human activities, an idea in and of itself, and mathematical relationships and formulas. If an abstract idea is determined to be present in a claim, part two of the analysis provides for determining if a claimed element or combination of elements is sufficient "to ensure that the claim amounts to significantly more than the abstract idea itself." In this respect, Alice and PTO Guidance urge consideration of whether a claim provides more than mere instruction to apply an abstract idea.

The PTO Guidance provides examples of elements of a claim that may qualify as "significantly more" than an abstract idea, including improvements to another technology or technical field, improvements to the functioning of a computer itself, and "meaningful limitations" beyond generally linking the use of an abstract idea to a particular technological environment. In the latter respect, the PTO Guidance goes on to note that a claim directed at a generic computer  performing generic computer functions within the parameters of well-understood, routine and conventional activities will generally not qualify as being "significantly more" than an abstract idea.

In Alice, the Court found the patent at issue was directed to the abstract idea of intermediated settlement to reduce settlement risk, and went on to conclude that the use of a general-purpose computer implemented to reduce settlement risk did not quality as "significantly more" than an abstract idea, and as such held the claims in Alice patent ineligible.

No Categorical Exclusions to Patentability

While a minority of justices on the Court would have further held that business method claims are not patent eligible, this view was not shared by the majority of the Court. Despite the Court's extensive commentary explaining that limitations to a generic computer does not add to patentability, the PTO Guidance itself notes that Alice neither created any excluded category of subject matter, such as software or business methods, nor imposed any special requirements for eligibility of software or business methods.The PTO Guidance accepts Alice as authority that the Mayo framework for analyzing patent eligibility should be used for all types of claims (e.g., product, system or process claims) and all types of exceptions to patentability (e.g., laws of nature, natural phenomena and abstract ideas). Ultimately, and in spite of limited guidance around what qualifies as "significantly more than an abstract idea" to meet patent eligibility requirements, it would seem that the Court and PTO are both prepared to continue to accept that software and other computer-implemented innovations are patentable.

For further details, see the Alice decision and the PTO Guidance.

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.

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