By Jason Rantanen
Alice Corporation Pty. Ltd. v. CLS Bank International (2014)
Download opinion here: Alice v CLS
This morning the Supreme Court issued its opinion in Alice, unanimously affirming the Federal Circuit and finding all claims drawn to patent ineligible subject matter under Section 101. Justice Thomas wrote for the opinion for the Court. It begins:
The question presented is whether these claims are patent eligible under 35 U. S. C. §101, or are instead drawn to a patent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.
The opinion includes both the actual language of representative claims (in a footnote) and the court’s interpretation of them (in the body of the opinion). The latter is primarily what the court focuses on:
In sum, the patents in suit claim (1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims). All of the claims are implemented using a computer; the system and media claims expressly recite a computer, and the parties have stipulated that the method claims require a computer as well.
The Court next summarizes the long-standing nature of the law of nature, natural phenomena, and abstract ideas exception to patent eligibility, and reiterates that these exceptions are driven by a concern about pre-emption, balanced against caution in allowing the exceptions to swallow all of patent law:
Accordingly, in applying the §101 exception, we must distinguish between patents that claim the “‘buildin[g] block[s]’” of human ingenuity and those that integrate the building blocks into something more, Mayo, 566 U. S., at ___ (slip op., at 20), thereby “transform[ing]” them into a patent-eligible invention, id., at ___ (slip op., at 3).
Next comes the first key part: the Court reiterates the framework described in Mayo v. Prometheus, including the inventive concept language:
In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), we set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. Id., at ___ (slip op., at 8). If so, we then ask, “[w]hat else is there in the claims before us?” Id., at ___ (slip op., at 9). To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. Id., at ___ (slip op., at 10, 9). We have described step two of this analysis as a search for 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.” Id., at ___ (slip op., at 3).3
Applying this framework, the Court first found the claims directed to an abstract idea.:
On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’”
It then concluded that the claims also failed the second step: “the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent eligible invention.”
Here’s the second piece of key language, which relates to the computer-implemented nature of the claims:
These cases [Mayo, Flook, Benson, and Diehr] demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Mayo, supra, at ___ (slip op., at 3). Nor is limiting the use of an abstract idea “‘to a particular technological environment.’” Bilski, supra, at 610–611. Stating an abstract idea while adding the words“apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to“implemen[t]” an abstract idea “on . . . a computer,” Mayo, supra, at ___ (slip op., at 16), that addition cannot impart patent eligibility.
It is irrelevant that a computer is a physical object:
There is no dispute that a computer is a tangible system (in §101 terms, a “machine”), or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the §101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept. Such a result would make the determination of patent eligibility “depend simply on the draftsman’s art,” Flook, supra, at 593, thereby eviscerating the rule that “‘[l]aws of nature, natural phenomena, and abstract ideas are not patentable,’” Myriad, 569 U. S., at ___ (slip op., at 11).
Applying this standard, the Court concluded that the claims at issue here did nothing “more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Slip Op. at 14.
Note that the Court’s ruling applies to the method claims, the computer system claims, and the computer-readable medium claims. Here’s the third bit of key language; I predict it’s going to tie folks in knots:
As to its system claims, petitioner emphasizes that those claims recite “specific hardware” configured to perform“specific computerized functions.” Brief for Petitioner 53.But what petitioner characterizes as specific hardware—a“data processing system” with a “communications controller” and “data storage unit,” for example, see App. 954,958, 1257—is purely functional and generic. Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims. See 717 F. 3d, at 1290 (Lourie, J., concurring). As a result, none of the hardware recited by the system claims “offers a meaningful limitation beyond generally linking ‘the use of the [method] to a particular technological environment,’ that is, implementation via computers.”
Put another way, the system claims are no different from the method claims in substance. The method claims recite the abstract idea implemented on a generic computer;the system claims recite a handful of generic computer components configured to implement the same idea. This Court has long “warn[ed] . . . against” interpreting §101“in ways that make patent eligibility ‘depend simply on the draftsman’s art.’”
Justice Sotomayor, joined by Justice Ginsburg and Breyer, agreed that the method claims here were drawn to an abstract idea, but concurred to express agreement with Justice Stevens’ view in Bilski that a “claim that merely describes a method of doing business does not qualify as a‘process’ under §101.”