U.S. Supreme Court Decides Alice v. CLS Bank: Computer Patents Ineligible Unless Claims Recite Non-Conventional “Inventive Concepts”

[This post was written by David, and posted by Stefano on his behalf]

This morning, a unanimous U.S. Supreme Court ruled that claims directed to computer-implemented methods and related systems are not eligible for patenting under 35 U.S.C. § 101 unless they contain a non-conventional “inventive concept,” and that a generic reference to a general purpose computer, or even “purely functional and generic” hardware components, does not make an otherwise ineligible invention patentable. The complete opinion is here.

Although the decision (by Justice Thomas) falls short of a bright-line test for patent eligibility, it does elaborate on the two-step analysis that should be applied.

First the Court must decide whether the subject matter claimed is directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea. The Court reasoned that the intermediated settlement concept claimed in the Alice patents was not meaningfully different from the concept of risk hedging found to be ineligible in Bilski. Like the Court in Bilski, however, the Court avoided defining “abstract idea,” instead stating that “we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.” Slip op. at 10.

Second, if the claims are directed to an ineligible concept, then the Court framed the second step based on Mayo’s “inventive concept” requirement:

If [step one is met], we then ask, “[w]hat else is there in the claims before us?” [Mayo,] 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., 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. slip op., at 3.

To apply this second step, the Court noted that the claims must recite some element that is an “inventive concept” sufficient to “transform” the claimed abstract idea into a patent eligible invention. On this point, the Court cautioned that merely reciting a generic computer, or even conventional computer components or function, is inadequate. “[I]f a patent’s recitation of a computer amounts to a mere instruction to ‘implement’ an abstract idea "on … a computer," that addition cannot impart patent eligibility.” Slip op. at 13, quoting Mayo.

Applying the two-step test to Alice’s claims, the Court found them to be ineligible. First, the method claims were addressed to the abstract concept of settlement intermediation. Second, although the claims recited computer-implemented steps, those steps (alone or in combination) were “purely conventional.” The Court concluded that the claims did not improve the functioning of the computer, or reflect an improvement in any other technology or field. “Instead, the claims at issue amount to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” Slip op. at 15. Therefore, the claims were ineligible for patenting.

Alice’s system claims fared no better under the two-step test. Although the system claims recited specific hardware components (such as “data storage unit” and “communications controller”), the Court dismissed those elements as “purely functional and generic.” Slip op. at 16. As a result, the elements did not provide meaningful limitations, and only linked the concept to a particular technological environment – in this instance implementing the concept using a computer. The Court reasoned:

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.’” Mayo, slip op., at 3.

As a result, the system claims were also ineligible.

Justice Sotomayor, joined by Justices Breyer and Ginsburg, concurred in the result, noting their belief that business method patents are ineligible per se.