No. 37
August 2014

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United States Supreme Court in Alice Corp. v. CLS Bank Makes Obtaining Software Patents in the US More Difficult for Patent Practitioners
(Article by Joshua Goldberg and Rich Beem, Nath, Goldberg & Meyer and Beem Patent Law Firm, Washington, DC and Chicago, IL, U.S.A.)
In its unanimous opinion of Alice Corporation v. CLS Bank, 134 S. Ct. 2347 (2014), the US Supreme Court struck down all the patent claims at issue, drawn to a method for exchanging financial obligations, a computer system configured to carry out the method, and a computer-readable storage medium containing program code for causing a computer to perform the method.

The Court implemented a new two-step analysis for determining patent-eligible subject matter in the US:
  • Are the claims directed to laws of nature, natural phenomena, and/or abstract ideas?

  • If yes, what else is in the claims to transform the nature of the claim into a patent-eligible invention?
In answering “yes” to the first question, the Court quoted extensively from its recent Mayo, Bilski, and Myriad decisions, confirming laws of nature and natural phenomena still constitute exceptions to the generally broad classifications of inventions qualifying for protection in the US. The Court also indicated its desire to “tread carefully in construing this exclusionary principle lest it swallow all of patent law.”

The Court decided the claims at issue were drawn to the ineligible concept/the abstract idea of intermediated settlement. The Court indicated the patent claims were drawn to a concept that is “a fundamental economic practice long prevalent in our system of commerce.” This was considered a clear decision, since “[W]e need not labor to delimit the precise contours of the 'abstract ideas' category”, with no meaningful distinction seen between concepts of risk hedging and intermediated settlement, as decided in Bilski.

Regarding what else might be in the claims, this could also be described as a search for the “inventive concept”, or an element or combination of elements sufficient to ensure the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself. In making the determination, the Court indicated the claims should be considered individually and ”as an ordered combination“. Further, the Court indicated the importance of determining whether the additional elements transform the nature of the claim into patent-eligible subject matter.

Here, the Court stated mere recitation of a generic computer cannot transform a patent-ineligible abstract idea. Further, generic computer implementation generally does not provide any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea]”. Since each step of the claimed methods was performed by a purely conventional computer performing generic computer functions, these claims were deemed to be patent-ineligible. Regarding the system and media claims, these claims were considered substantively no different than the method claims, reciting a handful of generic computer components to implement the same idea.

One troubling aspect of this decision is the reference to the desirability of solving a “technological” problem, wherein the solution is an “inventive application” of a formula or abstract idea. This terminology seems to make the requirements of utility/industrial applicability, novelty, and non-obviousness/inventive step aspects of the patent-eligible subject matter question. This seems to contrast with the analysis undertaken by, for example, the EPO, which focuses on the requirements of technical content and technical effect.

Since this decision was issued, the USPTO released a memorandum providing preliminary instructions to Examiners relating to patent-eligibility of claims involving abstract ideas, particularly computer-implemented abstract ideas. The memorandum indicated the framework set forth in Mayo, not previously used for claims involving abstract ideas, now would be used for examining such claims. Further, under the second step noted above, Examiners are now required to determine whether any element or combination of elements in the claim ensures the claim amounts to significantly more than the abstract idea itself.

It would appear the Alice decision continues the recent US Supreme Court trend of shrinking the types and extent of inventions that can be considered patent-eligible. Despite the discussion to the contrary, it is now an open question as to whether or how pure software inventions can be patented in the US. Further developments and implementation can be expected (and will bear watching) in the USPTO and in the US courts.