Source: http://www.pugetpatent.com/blog/2014/6/alice-v-cls-decided-by-supreme-court/
Timestamp: 2019-04-23 18:36:43+00:00

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Posted Saturday, June 21, 2014.
On June 19, the Supreme Court decided the case of Alice Corporation v. CLS Bank, in which a patent held by Alice Corp. for a computer-implemented invention was invalidated.
In a unanimous decision, the Court held that the patent claims did not meet the test for patent eligibility under Title 35 U.S.C, section 101. Eligibility is a threshold test in patent law, and section 101 describes the categories of inventions for which a patent may be sought (See the statute here). Patent eligibility and patentability are two different concepts (Read my blog on patent eligibility versus patentability here).
Courts have long held that abstract ideas and laws of nature are not patent eligible. In 2012, the Supreme Court invalidated a patent in Mayo v. Prometheus (Read my blog on the Mayo v. Prometheus decision here), where the patentee had been issued a patent for a medical test in which a level of a particular substance in a blood was determined and a test result was reported based partially on that level. The Court held that the patent was an attempt to monopolize a law of nature - the relationship between the substance in the blood and the need to administer more or less of the drug. There, the Court essentially held that taking a law of nature and applying well-known and understood steps in the particular field to the law of nature did not arrive at an invention meriting a patent.
So in Mayo v. Prometheus, the Court essentially said that to take a law of nature and add “apply it” to the patent claims did not result in a patent eligible invention. Following a similar tack in Alice v. CLS, Justice Thomas noted that the computer-implemented invention was drawn to mitigating settlement risk in financial transactions. The concept of mitigating settlement risk via exchanging financial obligations among parties to the transaction is well-known. Alice had incorporated a way of doing so into a computer program and/or a computer system. Justice Thomas deemed the scheme for mitigating settlement risk an “abstract idea” (not patent eligible) and then, as in Mayo v. Prometheus, said that to take an abstract idea and add “apply it” to the patent claims also did not result in a patent eligible invention.
The holding leaves room for patent eligibility of computer-implemented inventions. Going forward, what we know is that a patent application on a computerized-version of an abstract idea, or law of nature, will not likely issue as a patent. The opinion does not discuss computer-implemented inventions which aren’t implementations of abstract ideas or laws of nature, however. Arguably, previous Federal Circuit holdings which give guidance on patent eligibility of computer-implemented inventions will hold up. In one example, the CAFC wrote that where a computer-implemented version of a process executes faster than the steps could be completed in the human mind, such as calculating a changing GPS position many times a second, the resulting computer-implemented invention remains patent eligible.
On the other hand, the logic behind the CAFC 2011 CyberSource v. Retail Decisions holding seems to have been confirmed by the Supreme Court’s Alice v. CLS decision. Interestingly, the Chief Judge of the Federal Circuit at the time, Judge Randall Rader (who has recently announced his retirement), had spoken out against the CyberSource decision (Read my blog about Judge Rader’s CyberSource comments here), arguing that where the claims included a computer system itself, that made the claim patent eligible. Section 101 recites “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” as patent eligible subject matter, and a computer system is clearly a machine. When Alice v. CLS was at the Federal Circuit, Chief Judge Rader had participated in an opinion which said the system claims in suit would be patent eligible, for essentially the same reason. The Supreme Court has now discarded that rationale.
The Alice v. CLS decision marks the end of a very-busy Supreme Court term for patent-related cases. I previously noted that the Court takes about one patent case a year (Read my blog on this here, but this year we have had a higher than average number of patent-related decisions. We’ve also had opinions relating to infringement (Akamai) and indefiniteness (Nautilus) for example.

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