The Supreme Court decision in Alice v. CLS
Bank.1 provides a framework for determining when a
patent claim is directed to one of the long-standing exceptions to
patent eligibility, namely, laws of nature, natural phenomena, and
abstract ideas. That is, even though a patent claim technically
falls within one of the four statutory categories of
invention—process, machine, manufacture, or composition of
matter—the claim may not be patent-eligible if it is directed
to one of the exceptions to the extent that the claim preempts or
monopolizes one of these fundamental building blocks.
Alice particularly addresses whether computer-implemented
inventions are patent-ineligible abstract ideas, but the framework
set forth in Alice is broadly applicable to each of the
long-standing exceptions. The Alice framework includes a
two-part test: first, determining whether a claim is directed to an
abstract idea, and if so, then determining whether the claim has
additional elements that transform the claim into patent-eligible
subject matter by supplying an "inventive concept."
However, this two-part test left patent practitioners, patent
holders, and patent applicants alike in a state of uncertainty
because the Court resolved the "abstract idea"
determination in the test's first part by way of example,
rather than by providing a clear definition. Further, the second
part of the test requires a claim analysis to search for an
"inventive concept," and the Court again resorted to
fact-specific examples of what might constitute additional features
of a claimed invention that are "sufficient to ensure that the
patent in practice amounts to significantly more than a patent on
the [ineligible concept] itself."2 Subsequent
Federal Circuit decisions applying Alice shed light on
patent eligibility of claims directed to abstract ideas,
specifically abstract ideas implemented on a computer and/or using
the Internet. Here, we recap the cases to date that have fallen
within and outside both parts of the test. The Interim Guidance on
Patent Subject Matter Eligibility3as well as the Subject
Matter examples,4recently issued by the USPTO,
substantially adhere to the principles of these cases.
Step 1: Are THE claims directed to AN abstract
idea?
The first step of Alice asks whether the claims are
directed to an abstract idea. Alice notably declined to
define the term "abstract idea," and even acknowledged
that at some level, all inventions are directed to an abstract
idea. But for this first step, the Court focused on preemption:
does the invention seek to improperly patent building blocks of
human ingenuity? If the claims recite broad building blocks of
innovation, they are directed to an abstract idea.
Supreme Court
To answer step 1, the Alice Court first distilled from the
claimed invention a short narrative to characterize the
"abstract idea" to which the claim is directed. In first
applying this framework in Alice, the Supreme Court looked
back to previous Supreme Court cases and provided reasoning for how
its previous cases fit within the new two-step framework. The
Supreme Court cases in Table 1 of the Appendix illustrate a
comparison between the claim language and the abstract idea
generalization. The Supreme Court then found that the claims in
Alice's patents were directed to an abstract idea as covering
fundamental economic principles.
Federal Circuit
Applying Alice, the Federal Circuit held that five claimed
inventions were directed to abstract ideas and one claimed
invention was not directed to an abstract idea. In the former
cases, the Federal Circuit—like the Supreme
Court—initially distilled the claimed inventions as
follows:
- "A process of organizing information through mathematical correlations [that is] not tied to a specific structure or machine."sup>5(Digitech)
- "[M]anaging a bingo game while allowing a player to repeatedly play the same sets of numbers in multiple sessions."6 (Planet Bingo)
- "Creating a contractual relationship—a 'transaction performance guaranty'—that is of ancient lineage" even if narrowed to particular types of relationships.7 (buySAFE)
- "The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad."8 (Ultramercial)
- "Collecting data, recognizing certain data within the collected data set, and storing that recognized data in a memory."9 (Content Extraction)
In the one case finding patent eligibility (DDR
Holdings), the Federal Circuit refused to simplify the claimed
invention as being directed to an abstract idea.10 The
claims covered an e-commerce outsourcing system that served a
webpage to a user with a look and feel of the host webpage when a
link was clicked by the user. Rather than finding that the claims
were directed to an abstract idea, the court reasoned that the
claims did not recite a mathematical algorithm, a fundamental
economic principle, or long-standing commercial practice. Instead,
the claimed solution was necessarily rooted in computer technology
to overcome a problem arising in the realm of computer networks.
Thus, the court concluded that the case was not as straightforward
as Alice or other abstract idea cases.
Takeaway for Step 1 of Alice
In the step 1 analysis, an entire invention (even if it involves
multiple steps) often can be summarized in a single sentence. And
if the invention can be so generalized, the court is likely to find
that the claims are directed to an abstract idea. However,
distinguishing the claimed invention from mere mathematical
algorithms, fundamental economic principles, or long-standing
commercial practice saved the patent in DDR Holdings from
this finding.
To avoid having the patent generalized to an abstract idea, it is
important to frame the invention in a way that is not interpreted
as overly broad. Seeking to patent applications of building blocks
of human ingenuity, rather than seeking to patent the building
blocks themselves, should be the goal. It is also important to
avoid a characterization of the invention as a mathematical
algorithm. Even if a significant component of the invention is an
algorithm, real-world tie-in applications of the algorithm may be
able to avoid a characterization that the invention seeks to patent
the mathematical algorithm.
Step 2: DOES something "SIGNIFICANTLY more"
Transform the nature of the claims?
The second step of Alice asks, in looking at the
individual elements of the claims and the combination of elements,
whether additional elements transform the nature of the claim into
a patent-eligible application (inventive concept). That is, for
patent eligibility, a sufficient element or combination of elements
must ensure that the patent in practice amounts to significantly
more than a patent on the abstract idea itself.
The Supreme Court in Alice notably did not define the
"sufficiently more" standard. However, Alice and
subsequent Federal Circuit decisions shed some light on what meets
this threshold.
Meets the "Sufficiently More"
Threshold
- The patent in Diehr related to a computer-implemented process for curing rubber that employed a well-known mathematical equation to solve a technological problem in conventional industry practice.11 Alice explained that the Diehr patent met step 2 because the curing rubber process "used a thermocouple to record constant temperature measurements inside the rubber mold—something the industry had not been able to obtain. The temperature measurements were then fed into a computer, which repeatedly calculated the remaining cure time by using the mathematical equation. These additional steps transformed the process into an inventive application...."12
- The patent in DDR Holdings focused on the problem of losing visitors to a third party's website. The patent relates to a host website that sends its visitors to a web page on the outsourced provider's server that 1) incorporates "look and feel" elements from the host website, and 2) provides visitors with the opportunity to purchase products from the third-party merchant without actually entering the merchant's website. The Federal Circuit explained that "the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks."13
Does Not Meet the "Sufficiently More" Threshold
- An algorithm implemented on a general-purpose digital computer. The computer implementations did not supply the inventive concept because the process could be carried out in existing computers long in use.14 (Gottschalk v. Benson)
- A computerized method for using a mathematical formula to adjust alarm limits for certain operating conditions (e.g., temperature and pressure) that could signal inefficiency or danger in a catalytic conversion process, where the computer implementation was purely conventional.15 (Parker v. Flook)
- A method requiring use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions. Each step of the claim was conventional (i.e., using a computer for electronic record keeping, obtaining data, adjusting account balances, and issuing automated instructions). Further, as an ordered combination, the method elements added nothing not already present in separately considered claims.16> (Alice)
- A process of gathering and combining data that does not require input from a physical device. A process that employs mathematical algorithms to manipulate existing information to generate additional information without additional limitations to something more than a patent-ineligible data profile.17 (Digitech)
- "A program that is used for the generic functions of storing, retrieving and verifying a chosen set of bingo numbers against a winning set of bingo numbers. The function performed by the computer at each step of the process is purely conventional."18 (Planet Bingo)
- Invoking computers without adding an inventive concept because the computer functionality was generic and quite limited: a computer receives a request for a guarantee and transmits an offer of guarantee in return. Limiting the use of the abstract guarantee idea to a particular technological environment was insufficient.19 (buySAFE)
- Instructing the practitioner to implement an abstract idea with routine, conventional activity at a high level of generality. Specifically, the data-gathering steps added nothing of practical significance to the underlying abstract idea. The steps of consulting and updating an activity log represent insignificant data-gathering steps and thus add nothing of practical significance to the underlying abstract idea. Nor did having the system actively restrict public access because it was considered insignificant pre-solution activity.20 (Ultramercial)
- "Use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry. At most, the claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment."21 (Content Extraction)
Takeaway for Step 2 of Alice
From these limited cases, some markers have been set for
determining whether the "something more" threshold is
met. First, it appears helpful if any of the elements of the claim
or the combination of elements recite novel steps or non-routine
components. But, reciting a novel implementation of an abstract
idea by itself does not turn the abstraction into something
concrete. Novel implementations are especially unimportant in this
analysis if the novel implementation is pre- or post-solution
activity, that is, if the claim recites a token non-abstract claim
limitation, which is not directly related to the invention's
solution. Second, it helps if the combination of elements adds
something not present in the individually considered steps. For
example, the combination could improve the functioning of a
computer or effect an improvement in another technology or
technical field. When drafting an application, it is a good idea to
include a discussion of improvements in technology. Finally, it
helps to limit the claimed invention in a meaningful way so as to
not cover building blocks of human ingenuity, for example,
including the recitation of a physical device, especially if a
claim is directed to a data structure or data profile. For this
third point, the claims should not cover all implementations of the
"abstract idea."
To achieve the "something more" threshold for
computer-related applications, the patent should focus on
technological improvements of computational efficiency, memory,
and/or storage. For example, an application could save CPU
processing resources, save time and/or improve memory management.
Further, the patent should focus on any improvements in another
technology that the invention leads to. Lastly, claiming physical,
real-world limitations as a necessary part of the claimed invention
may decrease the likelihood that the claim will be interpreted as
seeking to improperly patent an abstract idea.
Conclusion
From Alice and subsequent Federal Circuit decisions, the
patent system will likely remain an important vehicle for
protecting the commercialization of computer-implemented
inventions. Even though the patent eligibility of some of these
inventions is still in flux, the courts have not outright precluded
computer-implemented inventions from being considered
patent-eligible—especially when the inventions include
technological improvements. However, merely claiming a
general-purpose computer to perform routine or conventional steps
likely will not infuse patent-eligibility into a claim.
Appendix
Comparison of claims in
previous Supreme Court cases and the "abstract idea"
identified therein by the Supreme Court in
Alice
Claim Language |
"Abstract Idea" Identified by the Supreme Court in Alice |
Gottschalk v. Benson The method of converting signals from binary coded decimal form into binary, which comprises the steps of:
|
An algorithm for converting binary-coded decimal numerals into pure binary form.22 |
Parker v. Flook A method for updating the value of at least one alarm limit on at least one process variable involved in a process comprising the catalytic chemical conversion of hydrocarbons wherein said alarm limit has a current value of: Bo+K wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises:
|
A mathematical formula for computing alarm limits in a catalytic conversion process.23 |
Bilski v. Kappos A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price, comprising the steps of:
|
A series of steps for hedging risk, including (1) initiating a series of financial transactions between providers and consumers of a commodity; (2) identifying market participants that have a counter-risk for the same commodity; and (3) initiating a series of transactions between those market participants and the commodity provider to balance the risk position of the first series of consumer transactions.24 |
Alice v. CLS Bank A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, and the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:
|
A method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk. The intermediary creates and updates "shadow" records to reflect the value of each party's actual accounts held at "exchange institutions," thereby permitting only those transactions for which the parties have sufficient resources.25 |
Footnotes
1.134 S. Ct. 2347 (U.S. 2014).
2.Id. at 2356.
3.79 FR 74618, December 16, 2014.
4.http://www.uspto.gov/patents/law/exam/abstract_idea_examples.pdf.
5.Digitech Image Techs. v. Elecs. for Imaging, Inc.,758 F.3d 1344, 1350 (Fed. Cir. 2014).
6.Planet Bingo, LLC v. VKGS LLC, 576 Fed App'x 1005, 1007 (Fed. Cir. 2014).
7.buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014).
8Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014).
9.Content Extraction and Transmission LLC v. Wells Fargo Bank, National Association, 2013-1588, -1589, -2014-1112, -1687, at 7 (Fed. Cir. December 23, 2014).
10.DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).
11. Diamond v. Diehr, 450 U.S. 175, 177 (1981).
12.Alice, at 2358.
13.DDR Holdings, at 1257.
14.Gottschalk v. Benson, 409 U.S. 63, 64, 67 (1972).
15.Parker v. Flook, 437 U.S. 584, 593, 594 (1978).
16.Alice, at 2359.
17.Digitech, at 1351.
18.Planet Bingo, at 1009.
19.buySAFE, at 1355.
20.Ultramercial, at 715-716.
21.Content Extraction, at 9.
22.Alice, at 2355-2356.
23.Id.
24.Id.
25.Id. at 2356.
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