Supreme Court issues opinion in Alice v. CLS:
Identifies framework for determining if claims for software implemented inventions are patent eligible
Yesterday, the Supreme Court issued its highly anticipated opinion in Alice Corp. v. CLS Bank International, a patent case that dealt with whether abstract ideas can be patent-eligible subject matter when they are implemented by a machine, such as a computer. The decision in Alice could have a major impact on the drafting, prosecution and enforcement of patents for software implemented inventions. The Court found that the patent claims at issue, which covered a computer implemented system and method for mitigating risk of non-payment during financial transactions, were “drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform the abstract idea into a patent-eligible invention”. In doing so, the Court affirmed the Federal Circuit judgment that the claims were not patent-eligible.
In its decision, the Court described the delicate balance that is required when deciding patent-eligibility issues. Since abstract ideas are often “the basic tools of scientific and technological work,” granting a patent on an abstract idea “might tend to impede innovation more than it would tend to promote it.” However, going too far in excluding any use or reliance on abstract ideas could negate all of patent law, as the Court recognized that “at some level, all inventions … embody, use, reflect, rest upon, or apply [abstract ideas].” The Court summarized their duty in maintaining this balance as a need to “distinguish between patents that claim the building block[s] of human ingenuity and those that integrate the building blocks into something more.”
The Mayo Framework
In deciding the primary issue of patent eligibility, the Court relied on a framework it set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., a 2012 decision dealing with a method for optimizing administration of a drug to a patient. The two part framework consisted of (1) determining whether the claim at issue is directed to a patent-ineligible concept and (2) determining whether the elements of the claim, individually or in an ordered combination, contain an inventive concept sufficient to transform the abstract idea into a patent-eligible application.
In applying the first part of the Mayo framework, the court compared the claims to several past decisions where patent claims were found to be directed to abstract ideas themselves, most notably Bilski v. Kappos, which dealt with a business method for hedging against the risk of price fluctuations. In Bilski, the Court stated that hedging was a “fundamental economic practice long prevalent in our system of commerce,” and that a business method claim directed at such a practice was an abstract idea. Based on this comparison, the court concluded that “there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement” in Alice, finding both to be “squarely within the realm of abstract ideas.”
In applying the second part of the Mayo framework, the court noted that, in order to be patent-eligible, “a claim that recites an abstract idea must include additional features to ensure that the [claim] is more than a drafting effort designed to monopolize the abstract idea,” and that the transformation into patent-eligible applications requires “more than simply stat[ing] the [abstract idea] while adding the words ‘apply it.’” Extending this reasoning to software implemented inventions, the Court opined that stating an abstract idea while adding the words “apply it with a computer” still resulted in a deficient claim. Based on this reasoning, the court stated that the relevant question was “whether the claims (in Alice) do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” The Court concluded that the claims did not, and therefore did not meet the “inventive concept” requirement of the Mayo framework.
As is often the case with patent decisions coming from the Supreme Court, the long-term impact of Alice may be unpredictable until the Federal Circuit begins to apply the Court’s analysis in its own decisions. For patent drafters and patent applicants, capturing the “inventive concept” in claims for software implemented inventions is now a critical, but not clearly defined, requirement.
The Court did cite one example of an “inventive concept,” referencing Diamond v. Diehr, in which a mathematical formula for measuring the curing time of rubber was combined with a thermocouple and a computer to produce estimates of when the curing process would be complete. According to the Court, the claims in Diehr were patent eligible because “they improved an existing technological process [that] the industry ha[d] not been able to obtain.” While typically relevant for issues of novelty and non-obviousness, Diehr and its treatment in Alice indicate that “unmet need” for a process or improvement of an existing process may be relevant to patent-eligibility.
For patent drafters, in addition to constructing claims in a way that emphasizes the attributes found to support patent-eligibility in Diehr, including as much detail as possible in the disclosure about the implementation, complexity, and specific steps of a software process may help to minimize, though not eliminate entirely, the risks of patent-ineligibility.
The opinion for Alice v. CLS can be found here. For a summary of the oral arguments, click here to read the article “Supreme Court hears oral argument in Alice Corp v. CLS Bank: When are inventions too abstract to be patented?”
For further information, please contact William Morriss, Matt Schantz, Doug Gastright, Ann Schoen, Steven Goldstein, or any other member of Frost Brown Todd's Intellectual Property Law and Litigation Practice Group.