United States: Tracking The Evolving Abstract Idea Doctrine: How Courts Have Applied The Two-Part Test For Computer-Implemented Inventions Post-Alice

Last Updated: March 18 2015
Article by Trent B. Ostler, Robert Kinberg and Michael A. Sartori Ph. D.

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:
  1. storing the binary coded decimal signals in a reentrant shift register;
  2. shifting the signals to the right by at least three places, until there is a binary '1′ in the second position of said register;
  3. masking out said binary '1′ in said second position of said register;
  4. adding a binary '1′ to the first position of said register;
  5. shifting the signals to the left by two positions;
  6. adding a '1′ to said first position; and
  7. shifting the signals to the right by at least three positions in preparation for a succeeding binary '1′ in the second position of said register.

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: 
  1. Determining the present value of said process variable, said present value being defined as PVL;
  2. Determining a new alarm base B1, using the following equation:
    B1=Bo(1.0 - F)+PVL(F)
    where F is a predetermined number greater than zero and less than 1.0;
  3. Determining an updated alarm limit which is defined as B1+K; and thereafter
  4. Adjusting said alarm limit to said updated alarm limit value.

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:
  1. initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
  2. identifying market participants for said commodity having a counter-risk position to said consumers; and
  3. initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

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:
  1. creating a shadow credit record and a shadow debit record for each stakeholder party, to be held independently by a supervisory institution from the exchange institutions;
  2. obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;
  3. for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only those transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order; and
  4. at the end of day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

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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