Alice v. CLS Bank: Partial Clarity for Computer Patent Claims – What Now?

6.20.14

On June 19, the Supreme Court issued a much-anticipated opinion in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, unanimously affirming the previous judgment at the Federal Circuit Court of Appeals that all of Alice’s patent claims were drawn to ineligible subject matter under Section 101 of the Patent Act.

Some commentators have quickly, and perhaps prematurely, deemed this opinion a victory in the ongoing battle against patent “trolls”.  Others have dramatically proclaimed the demise of the entire patent portfolios of companies such as Apple, IBM, and Oracle.  However, while the opinion will undoubtedly have some effect on existing patents, particularly those that are the broadest in nature and therefore arguably of greatest value to patent trolls, it remains to be seen if the actual effect will be as excessive as the rhetoric.

First, a few examples from the opinion in Alice are worth noting for what they do tell us.

Some pundits had openly questioned whether the test for patent eligibility previously enumerated by the Supreme Court in Mayo Collaborative Services v. Prometheus Laboratories (2012) was valid with respect to software-implemented inventions.  The patent claims in that case were found to be directed to a “law of nature,” and the opinion was considered by some to be effective only with respect to similar inventions.  Justice Thomas’s opinion here appears to have put this theory to rest.  The Mayo framework was cited throughout the opinion in analyzing the software-implemented business method claims at issue, and it may be safe to assume that the Court expects this test to be applied for all judicially recognized exceptions.

Another takeaway is that if your invention (as claimed) is directed essentially to a judicially recognized exception to patent eligibility such as an “abstract idea” or a “law of nature,” the claims are not saved by reference to generic computer implementation.  One of the key questions for the Supreme Court was whether or not the mere presence of elements such as a “computer system” or a “computer readable medium” would mandate a finding of patent eligible subject matter under Section 101, as at least a “machine, manufacture, or composition of matter.”  While perhaps correct in form, the Court expressly rejected such a finding.  If the claims only recite generic computer elements, or merely state an abstract idea that is applied by a generic computer, they are ineligible for consideration as a patent.

Next, and perhaps more importantly, we should note that which Alice does not expressly tell us.

We know that claims are ineligible if directed essentially to an “abstract idea,” rather than a patent-eligible application of an abstract idea.  Which, of course, begs the question- what exactly is an abstract idea?  There are some general examples of what constitutes an abstract idea to be divined from precedent: mathematical algorithms; fundamental economic practices; an original cause or motive; concepts; a desired result.  However, the Court expressly declined to “delimit the precise contours of the ‘abstract ideas’ category in this case,” and therefore we should expect continued uncertainty on this issue.

We also know that “generic” computer implementation cannot save claims that are otherwise directed to an abstract idea, but we cannot say with any certainty what constitutes “non-generic” computer implementation.  The guidance that we have from Mayo and Alice may be summarized as: if the computer elements provide meaningful limitations on the scope of the invention, such that the claim as a whole is directed to a practical and specific application of the abstract idea, rather than every application of the abstract idea, your invention should theoretically be patent eligible.

In conclusion, we should note that a large number of older patents are in worse shape than they were last week.  But this should not be overstated—the song remains the same for business method patents, with the main exception being that “system” and “method” claims now essentially rise and fall together.  Patent practitioners have been aware of the relevant test for at least two years now, and newer patent claims should be largely unaffected by this opinion.

In other words, effectively drafted patents, claiming with specificity computer-implemented inventions that represent real innovations over the prior art, are likely as valid now as they were before.  How valid that may be is still an open question- stay tuned.