Supreme Court rules on patentable subject matter in Alice

On June 19 2014 the Supreme Court issued its decision in Alice Corporation v CLS Bank International. This case dealt with what constitutes patentable subject matter under 35 USC § 101, which states:

"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title."

On December 6 2013 the Supreme Court granted certiorari on the following question concerning 35 USC § 101:

"Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?"

In an opinion by Justice Thomas, the recent Supreme Court opinion held that:

"[T]he 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." (Slip op at 1.)

In reaching this decision the court applied the framework set forth in Mayo Collaborative Services v Prometheus Labs, Inc (2012). As described by Thomas, the two steps of the Mayo framework for separating claim laws of nature, natural phenomena and abstract ideas from "patent eligible applications of those concepts" are:

• determining whether the claims at issue are directed to one of those patent-ineligible concepts; and
• asking "[w]hat else is there in the claims before us?" (Slip op at 7.)

This second step was described by Thomas 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'." (Slip op at 7.)

For the specific claims in this case (dealing with mitigating "settlement risk" in financial transactions), the Supreme Court determined that the specific claims directed to the process, computer-readable media containing the process and systems for implementing the process were all patent ineligible.

In a separate concurring opinion, Justice Sotomayor (joined by Justices Ginsburg and Breyer) reiterated the position of Justice Stevens' concurrence in Bilski v Kappos that any "claim that merely describes a method of doing business does not qualify as a 'process' under §101".

The decision affirmed the Federal Circuit's earlier en banc per curiam decision in which it unanimously held that the method and "computer-readable media" claims at issue were not patent eligible. Half of the Federal Circuit judges voting also ruled that the system claims at issue were not patent eligible, thus affirming the district court's decision invalidating those claims as well. That result was also affirmed by the Supreme Court.

The Supreme Court's decision follows a series of earlier opinions dealing with the issue of how the patent system should treat computer-related inventions, from Gottschalk v Benson in 1972 to Bilski v Kappos in 2010 (with Parker v Flook (1978) and Diamond v Diehr (in 1981) in between).